they do not have u.s. constitution rights. the president has admitted that they're too dangerous to be --eased, and we don't have would want to compromise our intelligence sources and methods why revealing that in open court so some have to be detained. the president has no solution. and people say the solution is what we're doing right now. they're in territory that we control outside the u.s. in guantanamo, cuba. let's turn down this amendment. mr. chairman, i yield back. >> if there's no further discussion on the amendment, the question is on adoption of the amendment offered by mr. smith. number 244. so many as are in favor will say aye. those opposed, say no. the noes have it, and the

amendment is not agreed to. the recorded vote is requested. the chair now recognizes the gentleman for the explanation and presentation of his amendment. >> thank you, mr. chairman. another set of issues surrounding guantanamo has to do with the cost to the american taxpayer of continuing this situation. and the purpose of my agenda -- my amendment, rather, is to not compound the mistake that's already been made. guantanamo was deliberately created as a nether land in the law that was neither subject to the geneva convention or the u.s. constitution so we could make up the rules as we went along. a lot of people that know more than this than us have concluded it was not a good idea, general petraeus, admiral mullgeneral petraeus said

guantanamo had become a recruiting device for extremists around the world. we just had a stimulating debate what to do next with the people that were detained there and is something we have to decide. here's something else we have to decide. we have to decide whether we want to continue to bear a cost that some have estimated as much as 50 times the cost of incarcerating people in a maximum security prison. the cost of incarceration in a federal maximum security prison is in the neighborhood of $34,000 a year. the cost at guantanamo is $1.6 million a year. $1.6 million a year. now, the president asked for $186 million for capital accounts and the mark has $247 million. my limit starts by striking that $61 million or so.

and it continues by saying let's not build more permanent facilities there. let's not compound this mistake, and let's think about this in terms of the american taxpayer. $34,000 a year versus $1.6 million a year. this is a decision we have to make. i would urge my amendment be supported. >> anyone now wish to speak on the amendment? >> mr. chairman, i -- >> mr. whitman, the gentleman from virginia, vecked for two minutes. >> i -- is recognized for two minutes. >> i have a perfecting amendment at the desk. >> that is number 237, perfecting amendment on the andrews amendment. would the clerk please distribute that. without objection, reading the amendment will be dispensed with. the gentleman is recognized for two minutes to explain his

amendment. >> thank you, chairman. my amendment restores the dollars back in to make sure we can do the construction projects there that are necessary, especially those things like the barracks project, the barracks there right now, i've been there before, absolutely terrible shape, mold and such. we want to make sure we have a permanent facility there, if you make that investment, for our marines, we want to make sure the barracks are permanent. i agree with mr. andrews. we need additional information on the cost and get a briefing on that. this amendment allows this briefing requirement to stay there but my amendment would reverse the prohibition on construction until we get that information. that ought to occur concurrently. we ought to get the information while continuing to pursue the construction. i want to make sure that happens. i also want to make sure, too, as we understand that, that we also get information from the president.

this perfecting amendment, we want to understand from the president what his plan is going forward with those detainees. i want to make sure we're able to understand that time and time again. the president points to congress and says listen, i can't do what i want to do because congress hasn't allowed me to do that. well, he's never reached out to this committee, come out to us with a plan. we want to understand what that plan is and my amendment would require the president to submit a plan, including the locations where he seeks to transfer the detainees that have been identified as too dangerous to release. also, we want to get his proposal regarding detainees identified for transfer and the conditions attached to the transfers and also what he's going to do with proposed future captures and also his proposal for disposition of high valued detainees currently held in atching. those detainees have to go somewhere, too. this amendment tries to bring those things together and keep those construction projects on track while we get information but also require the president to provide the congress the

information about what he plans to do with the detainees and the issue surrounding guantanamo. with that, mr. chairman, i yield back. >> the gentleman yields back. is there any discussion on the perfecting amendment? >> i'd like to be heard. >> mr. andrews. he is recognized for two minutes. >> first of all, i would agree with my friend from virginia, we want our personnel to have conditions sufficient they have good places to live and safe situations. there is still $186 million in here for that. it gets rid of the extra $60 million that would create a permanent presence there. i don't think we want a permanent presence at this place. and the other point i would make to you here is that this idea we build first and then get information later does not make sense to me. that i agree with the perfecting amendment saying we should get a cost accounting of what's gone on down there and we should get a plan for what's

going to happen in the future and i will support the perfecting amendment in kind. but i think that it guts the rest of this and says let's build first, spend first and ask questions later does not make sense for me. i think that's how we got into this situation and where we got to a point with we're spending by some estimates $1.6 million per inmate per year. when it would cost $34,000 per inmate per year in a maximum prison setting in the united states. this makes no sense to me so i certainly agree what's in the perfecting amendment and disagree with the fact of the rest of it and would urge defeat of the perfecting amendment to go forward with my own. >> mr. lamb born, the gentleman from california -- mr. lamborn, the gentleman from colorado, is recognized for two minutes. >> i would like to speak to the perfecting amendment. there are permanent conditions the marines would have besides

watching the detainees. there is the need to watch the entire property to make sure there's never some kind of nvasion of the property. as ave other sea base needs well. for the remainder of my time i'd like to yield to the gentleman from virginia. >> i thank the gentleman from colorado. there are, indeed, other mission there is, not just with the detainees but sea operations where the ships come in and out of there in that particular area, obviously defending the border with the country of cuba and our base there and remember, too, that if we're going to make that investment, we need to look at the long-term viability. if we're going to be doing this and there is an enduring mission there, which there is, we want to make sure we're keeping in mind the marines there, if we're going to spend the money, let's spend it in a wise way, not temporary barracks that will last less

than 10 years. let's make sure to mat investment and keep in mind the marines that are there. having been to a place like the basic school where we've just put in barracks facilities, i want to make sure we are indeed keeping first in mind the needs of our marines and by having those dollars in there for permanent facilities, and that is barracks, and that there are some other areas there, but the main element of this, the main cost of this is the upgrade of the barracks and making them permanent facilities. i think that's the thing we need to keep in mind and why it's important to make sure we have the $247 million in the mark. and with that, mr. chairman, i yield back. >> the gentleman yields back. w ms. m new hampshire, tsonga. >> from massachusetts. >> though it's mighty close. it's all up in the northeast,

right? it's a long way from california, wherever it is. the jeal the gentle lady is recognized for two minutes. >> i speak in opposition to the perfecting amendment and in support of mr. andrews' amendment. i believe we should not build permanent facilities at kwan taun mow. the mark provides $61 million more than the department of defense had planned to spend on replacing permanent infrastructure and instead construct permanent facilities in guantanamo. at a time our country is facing the negative effects of sequestration, we should work to close this unnecessary and expensive facility, rather than seeking to spend additional funds to make it permanent. at the minimum, prior to with construction, members should have a full accounting of the costs

required to keep guantanamo bay open including detention operations including other infrastructure replacements. i yield back. >> the gentleman, mr. thorn berry, is recognized for two minutes. >> we're going to have a military presence there and we need the barracks, medical facilities, etc., regardless whether there are detainees there. we need appropriate facilities for our folks. secondly, i don't think one can say this is how much it can cost for a person if federal prison versus this is how much it costs in guantanamo. for example, i have before me a copy of the letter the new york of mayor said to the o.m.b. saying his estimate to have trials just for the security in new york would be $216 million the first year and $206 million annually and subsequent years. now, maybe other cities wouldn't be as expensive as new york but the point is whether

it's detainee movements the marshall service would have to perform, f.b.i. pay in the federal system, if you're going to compare, there's a fuller comparison that needs to be made and i think that's what mr. whitman's amendment is trying to get at, you need to look at the whole gamut of costs if you're really going to get to what costs in various situation. i support mr. wittman's amendment and is a beginning step to evaluate apples versus apples. i yield back. >> the gentleman from arizona is recognized for two minutes. >> i rise to speak in favor of mr. andrews' amendment. it seems to me that any time we make decisions about funding or about continuing a program or project, we've got to know what it costs. that's just basic. we have to be making decisions based on facts. we don't have enough basis of the facts of what it costs in detail in guantanamo and we need to know that. it seems to me we're working

cross purposes. on the one hand we say we want the president, and i agree we should develop a plan that deals with the issues that relate to the release of these prisoners, however they're going to be released or prosecuted or imprisonned, whatever the course of action is, and at the same time we want to continue guantanamo and in fact build it up while we're asking the president to come up with a plan. we can't have it both ways. i want to make sure the president presents to this congress a detailed plan of how he's going to address the issues that have been raised today and over time good gitmo. and i don't want to see us build up gitmo at the same time we're asking for a plan to perhaps close it. i will vote against the perfecting amendment and in favor of the amendment submitted by mr. andrews. i yield back. >> the gentleman is welcome okized for two minutes. >> first of all, i want to ecollecto what congressman

wittman is saying. first, we're comparing apples to oranges. the third thing we've not talked about is the tragedy we've had to the cost of the american people by not bringing some of these people to justice at this particular point in time. we have had five of the worst terrorists to ever hit this country in 9/11. we had the best prosecutorial team and we talked to the prosecutor and he told us he'd have guilty verdicts on all five individuals within six months and this administration came in and shut it down, destroyed all the work they've done for two years, all the motions to get ready for trial and it was only when we came in and told them we're going to try these cases there and keep it in guantanamo bay and then decided they'd reach these cases and finally start to prosecute them. mr. chairman, part of what we've had is this administration not knowing what they wanted to do with they

ever went down there and you led the way to have us go down there, encourage members to go down and see it. we went down before the president thought about it and before the attorney general did. and what we found out was they were doing a good job in housing these people. they were maintaining their rights. they were secure down there. but also that we had built the facilities to try them which are different kinds of facilities and the prosecutors told us, you can't get those kind of facilities in the united states. we'll have to spend all those dollars there. so, mr. chairman, i hope we'll continue to do this. we've dragged our feet long enough. it's time for this administration to continue to prosecute these cases and keep these individuals out of the united states. that's what mr. wittman's perfecting amendment will help do and hope we pass that amendment and continue the provisions in the bill. with that i yield back. >> a discussion on mr. conoway a recognized for two minutes. >> real quickly.

the only permanent facilities will be the barracks that will be built and those of course will be multiuses for a lot of things as long as you have troops down there for whatever they're doing. whatever the president's plan comes up with is not likely in my mind he can guarantee or even mr. smith can guarantee us there's not some federal judge somewhere in the united states that would not let these guys go that we can't try for their crimes against the united states. so until somebody can show me that there's absolutely no possible way, absolutely no possible way that they could just simply would have to let them go and keeping them in guantanamo bay makes most sense. 166 of them, the worst of the worst. the bush administration and , tonio -- and obama situation they are very dangerous and i do find it interesting we're arguing the cost of these things when earlier this evening the cost of biofuels

and others that are waste dd not seem to bother my colleagues on the other side of the aisle. we need to keep them in guantanamo. i yield back. >> thank you very much. i would encourage any of the members that haven't been there yet to go down there and see it. i think most of us have probably been there at least once. but if you haven't been, please avail yourself of the opportunity to go down there. you can be down and back in one day and see firsthand exactly what's happening down there and gives you a lot better picture of what's really going on. if there's no further question now, the question is on the adoption of the wittman perfecting amendment. so many as are to the -- to the andrews amendment. so many as are in favor would say aye. those opposed, no. the ayes have it. the amendment is agreed to.

the question now is on the adoption of the amendment offered by mr. andrews as amended by mr. wittman. so many as are it in favor will say aye. those opposed, no. the ayes have it. and the amendment as amended is agreed to. >> amendment 275. mr. chairman, if sequestration had been imposed on us by a foreign power, we would view it as an act of war. now, our first choice should be to lift the cuts. we have the ability to do that in this congress if we had the guts. but failing that we should at least give the d.o.d. and the pentagon flexibility. every witness we have heard from this year has told us we are facing a hollow force. the general shelton of space command said he was already facing chaos and was not

exaggerating. secretary of defense panetta, all of them have warned us about this and what have we done? 16 hours into this markup, we are finally facing the real issue before this committee. it's not just up to me to come up with a response. there has to be positive action taken by this committee to at least give our troops, our men and women in uniform, some flexibility. what i am proposing in this amendment and it could not be a simpler amendment, it's really sec ntence and gives the def to accumulatively move -- the effect of sequestration in one year is $40 billion and would allow him to relieve half of the arbitrary stupidity because as many of you know each navy ship is a project, program, and activity.

how do you cut each ship 8% to 12%. this is insanity and so far this committee has not done anything about it. i'm not saying this is a perfect solution but it is a start and could not be more completely bipartisan. and if this committee does not stand up for the armed services, who is going to do it? so if others can suggest a better means, please let me know. in the meantime, this all you're going to be allowed to vote on in this whole markup of 16 hours to save our troops. as you know, due to sequential referral rules, amendments have to be crafted in a wily way so you can get it accepted procedurely in this committee and we'll have to work with others in this congress, both houses, to get this job done but let's begin that job tonight. let's not swallow sequestration

whole. let's not accept a hollow force. america deserves better than that. i've been complaining about this and hearing since february, this is our chance. this is our only chance. if not us, who? if not now, when? and i am sorry, it's 1:30 in the morning before we face the elephant in the room. the serious question that this committee faces. how are you going to answer that reporter's question when they ask you sometime over the next year or two because sequestration, unless we stop it, is a nine-year deal. how are you going to answer that question, what did you do to protect our military from sequestration? this is your answer. lease vote for this amendment. >> i have a question to the

gentleman from the amendment. is this basically, you're just reprogramming $20 billion to give them flexibility in the pentagon? >> yes. in order to avoid sequential referral, there are more artful ways of drawing up the amendment but if you mention the budget control act you have to get waivers from other committees as the chairman well knows. so this would at least in the c ional interest give the se gov leeway and we'll be faced ith crippling rules that sequestration will put on our military and this committee will have done nothing to stop. >> thank you very much. mr. rogers, the gentleman from alabama is recognized for two minutes. >> i wholly support mr. cooper's amendment and urge my colleagues to do the same. >> mr. chairman? mr. chairman?

>> mr. scott, the gentleman from georgia, is recognized for two minutes. >> mr. chairman, and mr. cooper, i certainly support the intent of the amendment. i guess my question would be wouldn't it make sense to give them the authority to bring before us a program -- a plan before they would actually spend that money and possibly let us approve what they brought before us in that plan? >> that would be the sensible thing but, you know, when general shelton and space command has already testified to us that he's already in chaos due to o&m problems we don't have that luxury of time. and i'm worried unless we lay down a marker here tonight, we may be dominated tonight by our own appropriators or by folks on the senate side not payings attention like this committee is trying to do. this is serious stuff and i was not exaggerating earlier. if this had been put on us by foreign power this would be viewed as an act of war. we should not give america a

hollow forest and we're about to unless we give them flexibility. >> i certainly support the intent of the amendment. i would -- as a member of congress, i'd like to see what they intended to do with that money. with that i'll yield the remainder of my time, mr. chairman. >> the gentleman yields back. >> let me encapsulate a little bit of this. this gentleman presenting this amendment is a very serious member of congress. and i have the utmost respect for him. he's really trying to do something here to help this roblem that we're confronting. but it doesn't really -- i wish it did solve the problem and would do so in a very simple and straightforward matter. but we're dealing with $487 billion in cuts. so that's $50 billion they're dealing with. the military said they could deal with that.

on top of that, we've got another $50 billion he -- or $500 billion of sequestration cuts which totally cuts indiscriminately every item, line item, boom, boom, boom. and this would -- that was $50 billion this year. o what you're asking is to give full discretion for $20 billion. that really doesn't solve the problem. what we really need to do is et rid of the sequestration. >> i'll accept the $50 if the chairman will raise me. >> let me finish. it's hard for me to think. but when we passed the spending bill for this -- was it 13, 14 we're working on now? >> correct, sir. >> 14 that goes to 30 this

year, when we did pass that and the appropriators passed the bill, the defense appropriation bill, we did give the , artment latitude discretionary leeway in funding for the rest of this year, plus we told them if you will come back to us with a request for reprogram, we'll be glad to work with you on that. and i think adam, weren't we down at the white house -- it's been a couple months at least now, and the comptroller in that meeting said he was going to be bringing the reprogramming up to us within a week or two, and they really needed it quickly because they were going to be short on cash. well, they weren't able to get that up to us until about a week and a half ago.

and it's about $9 billion. i guess what i'm trying to say is this is a very complicated thing and they couldn't decide among themselves between them and o.m.b. on what to ask for in that $8.5 billion, $9 billion they finally brought up to us and there's a lot of controversial items in there. there is a way to deal with reprogramming, they have to get approval -- adam and i have to sign off and the appropriators have to sign off. t this just, you know, would say ok, you deal with the $20 billion -- >> would the chairman yield for a brief moment? >> i would. >> the current law is reprogramming is limited to $3.5 billion cumulative for a year and $3.5 billion is just a drop in the bucket. if you're worried about $20 billion being enough, we need to enlarge that number and that would give you and the ranking

member -- >> we're already grappling with the $8.5 billion or $9 billion that they've sent us at this point that we're still struggling with. mr. turner, the gentleman from ohio, is recognized for two minutes. >> thank you, mr. chairman. i want to go back to what mr. scott said and i agree with him wholeheartedly. there's a significant amount of danger in a provision like this. now, many of us oppose sequestration and we're now seeing the effects that it brings with these indiscriminate cuts but what needs to happen is sequestration needs to be set aside, not that the department of defense needs to be given discretion. the money needs to be put back, not just a shell game, the money moved inside. and if you give the department of defense this authority, this broad number, many of the initiatives that we just put in this bill could suddenly go away and be stopped. the things that we all think

are important that we voted even unanimously to have the department of defense do, they could step aside and say well, i now have this $20 billion authority to undo. and the other aspect is that let's say sequestration is remedied, this provision would remain in law and it would continue past sequestration being back filled and continue with the department of defense having this broad-brushed pen that would be almost like a mini brac and without any commission or oversight from congress. i agree with the chairman's comments that there are mechanic nick -- mechanisms congress is involved but we shouldn't give this broad authority. i yield back. >> the gentleman yields back. mr. smith, the gentleman from washington, is recognize for two minutes. >> to clarify a couple points. in the f.y. 22013 money, the appropriations bill we passed, that was passed by congress, did not deal with sequestration

and gave d.o.d. an appropriations bill for fy-13 and then sequestration cut on top of it and didn't give them flexibility. they're going through fq-13 trying to deal with sequestration without flexibility. and mr. cooper, correct me if you're wrong but what you're doing here is you're expanding the reprogramming authority. now, that reprogramming authority still has to be approved by four committees in congress by house, national senate, props, and authorizing. so we're not completely just throwing it open to them. for that $20 billion. i'm sympathetic to the idea of greater flexibility. i do think you overstate slightly that this is the only important thing we've done in both in 6 hours 3789 terms of how important they are and because we've done a couple things important in the last 16

hours. $20 billion is helpful. it's not the be all and end all of solving the problem. they still have to cut the money. they still have to live within a lot of the boundaries. it helps them a little bit. i don't think it helps them as much as you stated. and the other problem is that the department of defense is not the only one facing this problem. every other agency is in this box and would be giving special treatment to defense. we talked about this. we're the armed services committee and we do what we can do. when we get to the floor we can talk about doing it more broadly. i'm legitimately undecided about the amendment but wanted to make sure everybody under toot what you're doing here. and is not as big a's promise seea. but it is for what the chairman pointed out, a relatively small amount of money in terms of total sequestration number.

it is not a big panacea. >> the gentleman yields back. the gentleman from california, r. gare mendy -- mr. garamendi is recognized. >> for the last 16 hours or so we've been doing we v -- doing very, very important work, generally spending well over $16 billion, maybe $100 billion if we were to account all the expenditures in afghanistan and related things that will happen not in our budget but the c.i.a. and state department and the rest. . basically we've refused to make decisions, the tough decisions about what money was actually available to us. and so we spent. i talk about $2.6 billion for the afghanistan air force which really doesn't exist, nuclear weapons here and there, anti-missile systems that don't work in places that are not needed, on and on and on.

and then we come back to the last of this and say oh, my god, we've got sequestration, yes, we do. but we managed to build quite an empire of spending here. actually, well beyond what the administration wanted. and we didn't spend one moment talking about the war in afghanistan and the $80 billion scheduled to be spent there. you want $20 billion? why is it with 30,000 troops less in afghanistan this coming year we're going to spend as much as we spent this year. what's that all about? not one discussion about that. anyway, i've lost a lot of votes and i'm not putting another motion on the floor so we'll let it go at that. >> mr. barber, the gentleman from arizona, is recognized for two minutes. >> i really appreciate mr. cooper's bringing this to our attention. it's late in the morning and i know you don't want to hear from one more person but let me

tell you about what i see back home. i represent men and women in the army at fort wachuka and men and women at the air force base and their families. and they are just demoralized by the way this congress has service. e military if we can do anything to relieve that pressure and to raise that moral, we should do it. even at this late hour, we've done a lot of important work tonight, i think we really must send a message that we generally, i hope, most if not all of us disagree with the idea of sequestration, irresponsible, disgraceful, bad idea. we could go on and on and describe it in any number of ways. i wasn't here to vote against it but certainly would have. this is not the way to decrease our spending and to deal with the deficit.

so i rise in support of the amendment. i think it's a message, as much as it is a partial solution to the problem. and i appreciate the gentleman bringing it to our attention tonight. i yield back. >> the gentleman mentioned he would have voted against sequestration had he had the opportunity. those of us who had that opportunity, you know, most votes, as you learn after you're here for a while, it's not a simple yes, no, black and white, that vote was multifaceted. the first thing that it did is raise the debt ceiling limit. if we hadn't voted for that we would have basically shut down the government. so the first thing was to pass the debt ceiling limit. e second thing was to pass a supercommittee that was responsible to come up with savings of another $1.2 trillion out of mandatory

spending over and above the $1 trillion that we took out of domestic spending. so a pretty broad thing. i think all of us that did vote for it had very strong concerns about sequestration. we were assured it would be so bad that the supercommittee would be forced to do its work. unfortunately, we find that they weren't able to do that so we've still got this hanging over us. you know, if everything were , we probably wouldn't be paid so much and would be a different kind of job. but we have to deal with life as it is and with the bills as they're presented to us. d , you know, i wish i could say every vote i've cast in this house in the 20-plus years i've been here, i feel really good about.

some of them, you know, you take the bad with the good. and unfortunately, there were good and bad in that bill. mr. mafay, the gentleman from new york, is recognized for two minutes. >> thank you, mr. chairman. what you say about it not being able to be always perfect is one of the reasons why we absolutely have to support this amendment. i, too, like mr. barber, wasn't here to vote against the sequester which i don't even believe will end up saving money because of the inefficient way these cuts are being implemented but by necessity. at the very least we need to stem the bleeding. i have people going to work army day in uniform 3 base and whether you approve or don't approve u.v.a. missions they're supporting our combat

troopses as we speak. because they're members of the national guard, they're subject to sequester even the next day, they could be under title 10, flying a mission in afghanistan, the next day they could be furloughed. this is absurd. i, too, would like to make sure we have our oversight capability and certainly would be a lot better to do this in a different way it. but mr. cooper offers at the very least to stem the bleeding. i'd like to get rid of the sequester on everything and have a lot of members on my own side of the aisle who say no, we can't settle. but i'll get rid of the whole thing, chip it away one piece at a time. we have to give our people enough flexibility to at least deal with the worst parts of this. so, mr. chairman, i appreciate very much what you said. i don't think this is simple at all. but certainly this relatively modest measure, i think we have to take that step and i thank you and thank you for the committee's indulgence at this late hour.

>> mr. chairman? >> the gentleman from utah is recognized for two minutes. >> sorry, but i'm going to -- i'll handle my committee in the morning in the same clothes i have on right now. sequestration was passed with a bipartisan vote. sequestration opposition was bipartisan as well. the fact i voted no on sequestration is actually nothing more than -- it gives me great happiness in that fact. and it also is not a solution to what's happening. as the chairman rightly said, sequestration is a problem but it was a problem compounded by prior cuts that had also taken place. everything worked together. what mr. cooper is presenting here is a wonderful and enthusiastic approach that is what you do at the beginning of our planning process. if we had taken this on as our goal at the beginning of this

process and used that as a metrix to go through it, we'd be ok. you don't do that at the enof the process. we still have to deal with the end result of what sequestration has put upon us and that deals with what we do with our budgetting and appropriations as we go forward. the house budget took a good step towards restorg and solving that problem and we need to build from that. and as much as i love what his emphasis is and what his fervor is and his passion is, this is not a motion we can actually pass at the end of the process. all it does is raise more problems and more concerns than it solves. so i really appreciate what he's doing but i have to raise my voice as well in saying that this is not the right time and this is not the right process for solving this problem. but there is a time and process and this committee must still dedicate ourselves to following through and achieving that

process. i yield back. >> any further discussion on the amendment? ms. davis from california, recognized for two minutes. >> thank you, mr. chairman. and i appreciate the comments of my colleague just now because i think the reality is that something is kind of like the elephant in the room, i think. we need to look forward to the next budget and we can't do that if we don't appoint conferees and we don't acknowledge until we get to the point of a conference that we're going to have that budget. so that's something that i think really needs to be done. and, you know, i'd love to hear from enthusiastic voices suggesting that that's the next step. and yet, you know, if we care so much about the services, which i believe we all do, we're devoted to that and yet we also know that there are multiple programs the men and

women that serve this country take part in our communities every single day. and i see them out there and i see them as soccer coaches and doing everything in the world, and they can't go out there and coach soccer when the parks and grass isn't taken care of. when the cities aren't able to do any of that. that's all part of the community. that's what we all live for is to have that association in our communities and really celebrate the people who are part of it. so i just think we've got to get busy and do that. an important step is appointing those conferees and i'd love to see us talk about that but it's late. so i think what mr. cooper is talking about is important but it just doesn't get the job done. hat's what we should be about.

>> if there is no further discussion on the amendment , the question is on the adoption of the amendment offered by mr. cooper. so many as are in favor will say aye. >> aye. > those opposed, no. in the opinion of the chair, he ayes have it. roll call vote has been requested. >> the committee debating an amendment giving the defense department more flexibility to deal with across the board sequestration budget cuts. the bill currently authorizes a total of $638 billion in mandatory and discretionary spending. that's an amendment that exceeds defense budget caps under sequestration by $52 billion. the house armed services eventually approved that defense authorization bill and markup late in the evening by a vote of 59-2 and heads to the house floor next week and will

consume much of the house work next week. they come back tuesday at noon eastern for general speeches, legislative business at 2:00, live coverage here on c-span. when they do return, john dingell of michigan will be the longest serving member of michigan and set the record today, first reflected in 1965 in a special election after his father passed away and held the seat before that. 29 consecutive elections, two two-year terms of john dingell of michigan and reaction from a number of his colleagues and the president, house speaker john boehner saying his devotion to his constituents and his country, the many battles he's fought and won on behalf of the american people and the sheer joy he takes in his work have made him synonymous with this institution. president obama commented saying that john has always worked tirelessly for the people of his beloved michigan and for working families across the country. he's helped pass some of the most important laws over the last half century. that's president obama. president obama is in

california ahead of a weekend meeting with the chinese president. he made comments today about the administration's accessing of phone records and data gathering programs, saying i think it's important to understand that you can't have $100% security and then have 100% privacy and zero inconvenience. we'll share but the president's comments in a few minutes here on c-span but first up, some background on this morning's issue from the "washington journal." host: cue give us yourer with suspective and assessment on both of enthusiastic programs we're talking about, the prison program and then the data collected from verizon. caller: i think it's extraordinary the amendment of leaps they've taken over the last few years. this is an agency that was designed originally to spy only outside the united states, to spy on foreign governments and

not to spy on u.s. citizens. and here the program allows n.s.a. to get access, it looks like virtually unlimited access to the major internet providers, google, yahoo!, microsoft, face wook and so forth in the u.s. host: what's different about these programs than ones we similarly heard about in the bush administration? guest: well, the bush administration, it seemed like it was far more limited than what we see here. first of all, in the bush administration, there were really no allegations they were focusing on purely domestic communications. and the program involving the telecom companies, verizon and so forth, involves not only domestic communications but local communications. in other words, if you're calling the next door neighbor. so there was never this far reach in the bush administration, though that program itself was quite

expensive. what happened was after the fees dministration, the dropping program, the code name stellar wind, after it was revealed by "the new york times," congress basically just 3 allowed that program to continue under the rubric of the foreign intelligence surveillance amendment act. so it basically codified into law the activities of the eavesdropping program of bush one and then expanded on by the obama administration. >> host: we heard dianne feinstein and others talk about their knowledge of the program but because courts are involved in the gathering of this information it shouldn't be an alarm to average citizens? guest: well, i think that's such a misnomer in terms of describing the foreign intelligence surveillance

court. when originally set up it was a very powerful court that exercised jurisdiction over who was being eavesdropped on. i went back to 1978 and that's how it worked from 1978 until 2001. and then that is when the bush administration secretly went around the court and then after that was discovered, what congress did was basically neuter the court. it took away a lot of its enforcement powers and basically made it a rubber stamp and turned the court into a rubber stamp. fisa ing don't worry, the courts overseeing operation is really nonsense. host: when it comes to the type of data gathered, is the term meta data and the way it's described, when the call is placed, how long, etc., is it as innocuous as projected by verizon and even some who talk

about the program? >> the metadata is all the externals from the telephone will -- telephone call exeps the conversations and where the call is made, which number is calling which other number, the frequency of the calling. all that information is just bland information and doesn't mean much but what the n.s.a. does, what is its job is to data mine that information, take it and turn it into something meaningful. so it's when you start analyzing that information that and tart value-adding it when you start getting into issues of privacy and so forth. you know, people in the u.s. are supposed to have some degree of privacy with their communications. if i call my next door neighbor, i wouldn't expect the n.s.a. would have a reason to have a record of that for how

long i spoke or how often i spoke or who i called after that. i mean, why are these -- you know, it's absurd to me that these agencies have this power to do this type of surveillance. host: there is an op-ed on this issue in "the new york post" and some of the arguments being made is get this straight, verizon has 120 million customers. whatever it is the n.s.a. is searching for, it isn't the use of a phone sex line or your jokes about obama or gambling problem or nothing about you, dear reader. you are exactly that unimportant to the computers at the national security agency. how would you respond to that? him to ve never known be an expert on the n.s.a. so i think that's just a bad

analysis of what the u.s. stands for. it doesn't stand for massive surveillance and what george orwell wrote in 1984 where you have a surveillance society and the government has access to everything. it's absurd to think that this is a great deterrent to terrace him. i mean, why didn't -- to terrorism. i mean, why didn't they prevent the boston bombing if it's such a great program, how about the underwear bomber or the times square bomber? the u.s. has had a really bad record in terms of preventing these terrorist incidents and for one reason is because they have too much information, not too little information. here you build the hay stack, the more difficult it is to find the needle. and all it keeps doing is building the haystack bigger and bigger and instead of hiring people to put more hay on the stack, they should be

hiring more analysts to analyze what's in the stack. and instead of just acquiring more and more information. after reading this article about the prison is that they nine anting -- not only major companies but trying to get information from more companies. if it's so great, why do these bombings keep happening? all i heard is it may have been some terrorist incident that was prevented they don't give any details of. host: one of the records was the president was open to discussion about the type of activity, the gathering of information versus concerns about national security and privacy. do you think these revelations of stories will open on a dialogue on capital hill about where we are as far as privacy is concerned? guest: the problem you have on capitol hill is all these

congresspeople, members of congress, want to play it safe after 9/11. they know there's no value in siding with civil liberty. so because you know when you go up for re-election, your opponent is going to say, unless you voted for, you know, some heavy-handed legislation involving surveillance or whatever, that you are weak on terrorism. and everyone wants to be accuse of being weak on terrorism and you get little support in congress for moderation or for lowering the bar when it comes to all this surveillance. i don't expect too much to come out of congress. i haven't expected anything out of congress for years if not decades. host: one more question, james bamford, as far as of a the information is taken and what's done with it there's a paper that shows the n.s.a.'s utah

data center in bluffdale, utah, is that where the information is stored or other places? guest: the n.s.a. data storage in bluffdale, utah, there was a "cover story" on that program for a magazine last year. it's a million square foot data center and will be the central location where all the information that n.s.a. picks up, whether it's by satellite or by previous collection or from the call details from verizon and so forth and all the information they pick up surveilling the middle east, libya, afghanistan, so forth, they all go to this one location, this one million square foot data center in bluffdale, utah, and that will serve as the n.s.a.'s cog. nerd, from that -- or to that

location, the n.s.a. analysts there and other places will be able to access all the data sitting in there through highly secured fiber-optic cables. it's the center suppository for n.s.a.'s surveillance capabilities and the point where the analysts dip into and come out of electronically to analyze the information. host: james bamford, national security writer, and author as well and writes for several publications joining us to give his perspective. mr. bamford, thanks for your time. guest: i appreciate it. thank you. >> president obama addressed concerns over the government surveillance programs discussing the need to balance individual privacy concerns with the ability to protect the country against national security threats.

speaking at an event in california, his remarks are about 15 minutes. >> remember, people, you'll have an opportunity to answer the questions when i'm with the chinese president today so i don't want the whole day to an bleeding press conference but i'm going to take jackie collins' question. >> can you please react to the reports of secret government surveillance of phones and internet? and can you also assure americans that your government doesn't have some massive secret database of all their personal online information and activities? >> yeah, you know, when i came into this office, i made two commitments that are more important than any commitment i make, number one, to keep the american people safe and number two, to uphold the constitution.

and that includes what i consider to be a constitutional right to privacy. and an observance of civil liberties. now, the programs that have been discussed over the last couple days in the press are secret in the sense that they're classified. but they're not secret in the sense that when it comes to telephone calls, every member of congress has been briefed on this program. with respect to all these programs, the relevant intelligence committees are actually briefed on these programs. these are programs that have been authorized by broad bipartisan majorities repeatedly since 2006. and so i think at the outset, it's important to understand duly elected

representatives have been consistently informed on exactly what we're doing. ow, let me take the two issues separately. when it comes to telephone calls, nobody is listening to our telephone calls. that's not what this program is about. as indicated, what the intelligence community is doing and oking at phone numbers durations of calls. they are not looking at people's names and they're not looking at content. but by sifting through the so-called metadata, they may identify potential leads with respect to folks who might engage in terrorism. if these folks -- if the

intelligence community then actually wants to listen to a phone call, they've got to go back to a federal judge, just like they would in a criminal investigation. so i want to be very clear. some of the hype that we've been hearing over the last day or so, nobody's listening to the content of people's phone calls. this program, by the way, is fully overseen not just by congress but by the fisa court, a court especially put together to evaluate classified programs to make sure that the executive branch or government generally is not abusing them and that it's being carried out consistent with the constitution. and rule of law. nd so not only does that court authorize the initial gathering of data, but i want to repeat, if anybody in government wanted

to go further than just that top line data and wanted to, for example, listen to jackie's phone call, they'd have to go ack to a federal judge and indicate why, in fact, they were doing further probing. now, with respect to the internet. with respect to the internet and e-mails, this does not apply to u.s. citizens and it does not apply to people living in the united states. in this instance, not only was congress fully apprised to it but the court has to authorize it. so in summary you have two programs that were originally authorized by congress, have been repeatedly authorized by

congress, bipartisan majorities have approved on them, congress is continually briefed on how these are conducted. there's a whole range of safeguards involved and federal judges are overseeing the entire program throughout. we are also set up an audit process, when i came into office, to make sure we're after the fact making absolutely certain that all the safeguards are being properly observed. now, having said all of that, you'll remember when i made that speech a couple of weeks ago about the need to shift out of a war mind set. i specifically said one of the things we have to discuss and debate is how will we strike this balance between the need to keep the american people safe

nd our concerns about privacy? because there are some tradeoffs involved. i welcome this debate. i think it's healthy for our democracy, i think it's a sign of maturity. five or six years ago we might have not had this debate. i think it's interesting that some people on the left and some on the right who are now worried about it who were not very worried about it when it was a republican president. i think that's good. but i think it's important for everyone to understand and i think the american people understand there's tradeoffs involved. i came in with a healthy skepticism about thies programs -- about these programs, we

scrubbed them thoroughly, we expanded the oversight, increased some of the safeguards, but my assessment and my team's assessment was hat they help us prevent terrorist attacks. encroachments on privacy that are involved in getting phone numbers or duration without a name attached content that g at doing. t was worth us le some other folks may have a different assessment of that. i think it is important to recognize that you can't have 100% security and also then have

100% privacy and zero inconvenience. we're going to have to make some choices as a society. what i can say is in evaluating the programs they make a ifference in our capacity to anticipate and prevent possible terrorist attack tivepy. the that they are under very strict supervision by all three brancheses of government nd they do not involve listening to people's phone calls, do not involve reading the e-mails of u.s. citizens or --. residents, about further absence further by action from a criminal court, i think on

balance we've -- we have established a process and procedure that the american people should feel comfortable with. but, again, these programs are subject to congressional oversight and congressional reauthorize and congressional debate. if they are members of -- if there are members of congress who feel differently they should speak up and we're happy to have that debate. we'll have a chance to talk further during the course of the next couple of days. thank you, guys. i don't welcome leaks because there's a reason why these programs are classified. i think there's a suggestion hat somehow any classified

program," "secret which means it's somehow suspicious but the fact of the matter is, in our modern history, there's a range of programs that have been classified because when it comes to -- for example, fighting terror. our goal is to stop folks from doing us harm and if every step we're taking to try to prevent a terroristing act is on the front page of the newspapers or on television then the people who are trying to do us harm are going to be able to get around our preventive measures. that's why these things are classified. but that's also why we set up congressional oversight, these are the folks you all vote for as your representives in

congress and they are being fully briefed on these programs. if in fact, there were abuses taken place, presumably those members of congress could raise those issues very aggressively. they are at power to do so. we also have federal judges that we put in place who are not subject to political pressure. they've got lifetime tenure as federal judges and they are empowered to look over our shoulder at the executive bran too much make sure that -- branch to make sure these powers are not being abused. we have a system that some information is classified and we have a system of checks and balances to make sure it is not abused. and if, in fact, this

information ends up being dumped ut willie nilly without regard to risks to the program, risk to the people involved, in some ases on other leaks risks to personnel in dangerous situations. it is very hard for us to be as effective in protecting the american people. that's not to suggest that you just say trust me, we're doing the right thing, we know who the bad guys are. the reason that's not how it works because we got congressional oversight and judicial oversight. if people can't trust the executive branch and don't trust congress and don't trust federal judges to make sure we're

abiding by the constitution, due process, and the rule of law then we're going to have problems here. my observation is the people who are involved in america's national security, they take this work very seriously. they cherish our constitution. the last thing they would be doing is taking programs like this listen to someone's phone calls. by the way, with respect to my concerns about privacy issues, i will leave this office at some point, in the next three and a half years. after that, i will be a private citizen. i suspect that, union, on a list of people who might be targeted, you know, so that somebody could read their e-mails or listen to their phone calls, i probably would be high on that list. it's not as if i don't have a

personal interest to make sure my privacy is protected but i know the people who are involved in these programs they operate like professionals. hese things are narrowly circumscribed. they are very focused and in the abstract you can complain about big brother and how this is a run a muck. gram when you look at the detailsic we struck the right -- details, i think we struck the right balance. thank you very much. >> president obama in san jose, lifornia had meetings with jinping.

herself a look at the history of unnylands. >> they built this as a winter residence and it was completed in 1966. they lived here until their etts in 2002 and 2009. it is referred to as the camp david of the west because presidents came here to relax and to get away from the hustle and bustle of washington, d.c. during the period of time. he owned the company and that

company actually published the daily racing form and the philadelphia inqure retire. his father was involved in this business for decades. his father actually was sent to prison in 1940 for tax evasion. at that point, walter took on the reigns of the company and it was in deep financial problems. he was responsible for ntroducing a number of new publishing elements that were wildly successful. "17 magazine" was launched in the 1940's, if first magazine geared toward young women. he pulled together the idea of tv guide and launched it when only 10% of american households

owned television. that became the most popular magazine in the america, had the highest circulation for decades and made the bulk of the financials for the company. he had a genius to recognize future trends and was able to use his company to get ahead of the trends. she was a delightful woman who was very typical of her generation, she was the woman behind the man. very often, walter would be the person who received the first recognition and he was the one who certainly was the businessman whose money funded their lifestyle. walter had a speech impediment so he practiced every day to make certain he could form his words and speak clearly.

so he was very careful about his language and his presentation. he was more reserved and his wife was instead the more light-hearted and more engaging conversationalist. we're in the atrium of the house. this is the room that you would have seen when you're welcomed to sunnylands, presidents, queen of england, great celebrities, all came through the front doors. this space was used for receptions, for the new year's eve parties that happened here regularly. much of the furniture in this space was removed and it was set so they could have up to 110 people for a seated dinner and dancing. jimmy stewart might sit at the piano and play, bob hope entertained, and frank sinatra

of course. walter neuron aled reagan going back to the 1930's so they had a long personal history. when ronald regular buns an actor in hollywood. over time that relationship, personal.deep and after he had been elected president he continued to come here. he came every single year for the 18 new year's eve parties. that was a moment every year where hollywood and government came together in a large social gathering. otherwise, they entertained in small groups. they would invite these individuals who were their friends to spend time here then they would thoughtfully

determine who those friends might enjoy meeting and create these kinds of connections that, perhaps, did not exist before. quincy jones used these elements of mid-century architect church to create a space that was informal that would flow from place to place. at the same time took a huge pace, this is actually 6,000 400 square feet -- 6,400 square feet. it does not feel overwhelming. it has a comfortable quality to it. that is a combination of the the tecture and furniture. off the atrium is a special room

at sunnyland, it is a room of memories. they made this determination they wanted a space where they could of the important friends and family and other individuals who they had come in contact with during their lifetime. there is a portrait of winston churchill. he met walter in the late 1940's. we have a photo of the couple with prince charles from 1986. they had a really important relationship with the royal family. you see walter and queen elizabeth. because he was the ambassador to the court of st. james and lived in london for five years, they continued for the rest of their coor spond and connect.

you see walter getting out of the carriage as he was going to be presented in london to the queen as he took on the job as ambassador. down here you see a photo of the signed with lasting appreciate and friendship. here's george w. bush much later in their life. the clintons, with grad attitude for your friendship. this wall is full of individual memories that record numerous conversations over decades in their life. clearly, those individuals who were important to them over time made it to this wall. so it isn't generally an

individual who they knew and only interacted with only once, but rather people who became their friends. in addition, we have a photograph of ronald reagan sitting in this chair looking at the television in this cabinet .n 1983 at the same time, ronald reagan's speech to the soviet people was being broadcast. this important topic was critical in changing world political dynamics. or us it makes it a very important historical spot in sunnyland. they were republicans, however,

they crossed the aisle. actually walter had the philadelphia inurer endorse linden johnson when he ran for president. he didn't only support republicans and the republicans he did support tended to be for central in relation to what we see today. this is the yellow room. it is one of five of the guest rooms. this room was the preferred presidential room. so the reagons always stayed in this room. it has a beautiful view. . rgaret thatcher was here really a prestidgeous list of room residents. like all of the rooms in the

guest wing it was differentiated by its color. we have a peach room and a green and blue room. if you were staying here, you would have color-coordinated jelly beans and selected books to read. earlyist at one of the rooms has twin beds. if you visit sunnyland we change this out and provide king-size beds, more comfortable and with contemporary linens and all of that. you would have the opportunity to enjoy the long list of the people who slept here before you. they made this gift to the nation by continuing its history by dynamic and relevant

conversations among people today. e've -- we have an interesting mission. our property is being preserved and maintained so it can be used by a relatively small number of people for the high-level retreats but at the same time, it is being preserved and maintained to it is be open to the public for a broader public access so they can appreciate the history of the place and experience the uniqueness and eauty of sunnylands. >> president obama and chinese president xi jinping meeting oday in california exra at the

sunnylands estate. they have set aside several hours for meetings and meals that are tended to be less scrirpted than typical meetings between world leaders. >> in order to raise money i filed an application with the 3r.s. seeking to obtain 501 c status. i've been waiting for 29 months without status. >> many of the agencies of the federal government do not understand they are servants of the people. they think they are our masters and they are mistaken. i'm not interested in scoring political points. i want to protect and preserve the america that i grew up in. the america that people cross oceans and risk their lives to be a part of.

i'm terrified it is slipping away. thank you. >> thank you very much. >> the purpose of a c 3 or c 4 tax exemption is to easier public good not political work. it is the responsibility of the i.r.s. to determine which groups are determining the correct status and which are trying to nipulate the system to avoid taxes and high campaign donor. >> the house ways and means hear about a partying members the i.r.s. targeting their groups. that is this saturday at 10:00 a.m. on american history tv on c-span3, the life and legacy of a civil rights leader. that is sunday an 5:00. >> when you put on a uniform for

a job that is a maintenance job and this is true if you're a building janitor or a sanitation the , you are assumed by role that you are almost part of the background, almost like a machine. you're a human being wearing that uniform. the general world gets to overlook you and it really not see you. i called it -- it's like a cloaking device. or harry potter' cloak of invisibility, which is interesting privilege. when i'm wearing the uniform i can observe people in ways they don't realize i'm observing them. >> a n.y.u. professor sunday at "q&a.n c-span's

>> the house oversight committee convened yesterday to evaluate the latest allegations by the i.r.s. this comes from the report revealing that the agency spent almost $3 million on conferences n a three year period.

>> the committee will come to order. committee's statements is we are to secure two fundamental principles. americans have a right to know that money washington takes from them through the i.r.s. is well spent. second, americans deserve an efficient and effective government that works for them. our duty is to protect these rights. our responsibility is to hold government accountable to taxpayers because they have a right to know what they get from their government. our job is to work tirelessly and partnership with citizen watchdogs to deliver the facts to the american people and bring reform to the federal

bureaucracy. today, more than any other hearing we revisit the kind of waste and the kind of failure to secure taxpayers heard-earned money that i can remember in history. i was shocked when the g.s.a., the body that was supposed to be the entire ut bureaucracy spending within limits, doing things improperly, determining what would be on a schedule and what it would cost. i was shocked they threw themselves parties. but to find out not only does the i.r.s. take your money, not give you proper answers, and then when it comes to tens of millions of dollars use it in a way that is at best maliciously

self indulgent. so spend more than you normally would spend by normal negotiations for rooms is unthinkable for any agency but it is when it is the i.r.s. and they give their own employees benefits such as local demrees anaheim and fail to file w-2's for that income. the i.r.s. effectively was guilty of tax evasion. saying you don't know doesn't help you, doesn't give you out an a taxpayer, it shouldn't give the i.r.s. an out when they are using taxpayer's money. professional education is critical and the i.r.s. more than any other organization, needs to be well trained, needs to understand not just the fundamental laws, but aa long history of rule making and federal cases that determine

what you do or don't pay. what you're allowed to do and what you're not allowed too. quite frankly, they need to be trained to teach the taxpayer as a customer, not a debtor. that justiced when appropriate travel, when appropriate visits to the very companies and individuals from who they receive the revenue that we in government spend. i want to say here and hopefully my ranking member will share this, we want the federal work force to feel when they have justified travel, reasons to go and have meetings, reasons to use hotel rooms or conferences that they do so. we don't want washington think or cincinnati think no training, no travel, no interaction. just the opposite. we want to get this right. many will say $50 million over these many conference is wrong. i will say for the tens of

thousands of workers who could have received great training, whose travel could be have been meaningful and less expensive they were cheated out of additional education and meaningful training by this waste. i don't believe that any of us could determine if $50 million, $90 million was the right amount to spend but with the help of the inspector general we know much of it was misspent and the american people did not get a well-trained federal work force. many federal workers will look at this hearing and say i don't get those perks. as a matter of fact, i would get fired if i took one of those perks. the federal workers around the country should be appalled there were two standards. rest. some, one for the

as taxpayers we should be appalled there are two standards, one for us and a different one for the people who work for i.r.s. in some cases. i think it is important that we understand that the reason we're holding this hearing and thanks to the inspector general's office, we have the facts just now on a study we've had for a long time. it concerns the period of 2010-2012. it is not a new occurrence. many of these things may not be happening today. both the administration and congress have acted to reduce the budgets for this kind of effort. i think that's the most important reason to have a hearing. we want the culture to be spend it and spend it wisely. we want the culture to be how can we get better training and a better trained work force? the best way is bid for the lowest price for what you need,

don't kick back perks. those are not what the rank and file wants, they want an opportunity to be well trained. i believe we're going to see a short video or a couple of them today. these are, once again, for a reason. training videos important. training material is important. if you do training material, not only do you show it to your employees at conferences but you put it on the web, you make sure they know about it, you use it again and again. if you have is entertainment, if you will, training through art it's not reuseable. it doesn't have the staying power. i want to make sure that the lavish behavior that you're going to hear today doesn't happen again. i think every federal worker wants to know there's a single standard they live up to it and

they expect those who they don't know about to live up to it. we often read that opening statement preamble about waste and whistle blowers. i want to say one of the problems we have until government is there are aren't enough whistle blowers. this hearing is about spending at these conferences and waste. but on everyone's mind is what the i.r.s. did out of cincinnati and washington and laguna and dallas offices to taxpayers and organizations that simply wanted to comply and made applications. those people should be better trained to give answers quickly. there should be have been employees necessary for them not to wait three years. when we look at over $3.2 million that was taken out of a fund to hire people and instead was used for these lavish

parties, it's pretty easy to see don't talk a budget tightness until you tighten the budget where you can. i think there's no question you're going to see outrage on both sides of the aisle here today. this is outrage that needs to be tempered with the fact that on the second panel we'll have a new acting commissioner. this committee eastern committees of congress need to work with the new commissioner so that he has the opportunity to straighten this organization out. yesterday, mr. werfel called me and we had a conversation and i normally don't share conversations but the conversation was important because it it was kind of a first step that i think is about the transparency of -- you tell what you're doing, most of it will never be spoken, it doesn't need to be spoken public.

we need to know and the various committees in the senate also, that the work is going the right way. the culture that had gone wrong has been changed. a culture that would see organizations abused for years without a whistleblower coming forward or would see some of these conferences and not be as outraged as we were is a culture that needs to change. for those who were outraged and those who are outraged today, i want everyone to understand for the vast majority of federal workers, this is not the norm. for the rest of the federal work force, if it's the norm it's time to blow the whistle and the america e, deserves value for their hard-earned money. > thank you, mr. chairman.

i think we must pause and give credit where credit is due. to you, mr. chairman, and this entire committee, to mr. ica. i also serve on the transportation committee and the chairman called hearings. he calls hearings and we all work together because back when the gsa kindle came up, we worked in a bipartisan manner -- gsa scandal came up, we worked n a bipartisan manner. we have been able to straighten out gsa. but we did more than that. i think we sent a powerful

message throughout the federal overnment that you cannot take the money of american workers nd waste it. i paused this morning to applaud what we have already done. but as i always say, we can do better. and we will. today we are going to hold this hearing to examine excessive spending by the irs at a conference held in anaheim, alifornia in 2010. i understand this conference ccurred three years ago. i know many examples we will discuss today like the

ridiculous tartaric video. --ridiculous star trek video. i swear, i do not see the redeeming value. i was about 3:00 this morning watching it. i was trying to get to the redeeming value. could not get there. however, these factor not lessen my frustration and anger. of this utterly wasteful spending. ake the star trek video. perhaps you can help us understand what it was. a parody of a television show and what many people unfairly think about federal workers. let me pause here and thank the chairman for what you said about

our federal workers. i'm a big defender of the federal workers. i think a lot of times they are criticized when they should not e and they get a raw deal. so i want to make sure that they understand and we understand this is not what we think of federal workers. every time i would watch these videos, i said to myself i'm a -- myself, this is appalling. but you know what really got me when i walked out the door to come to washington and to see my constituents who get the early bus the ones that go down to the

sheraton hotel in downtown baltimore and clean the floors, them. i thought about the man who came to me the other day because he just got a letter from the irs about an audit. and i believe he did not mind being audited him he was scared but he wanted to know he is in treated fairly and was to know -- the other day concentrated on truth and trust. oday, i'm going to add to that take and waste. what happens here and that when we have episodes like this, it has an impact on the average person. i live in a blog where most people do not make $50,000 a year yet we can produce a video hat has no redeeming value and

spend tax payers hard earned dollars for that. then there was that line dance. say we can do better. guess what? the money that was fed on that, that's my money. that's the lady who got that early bus this morning, that's her money. the one who $35,000, her. the gentleman up the street from me that makes 45 hauling trash. o it was wasted. that $50,000 is a huge amount for families struggling to get by. that's more than many households making this country. this is only part of a broader

problem. the inspector general's report finds that the irs spent approximately $48 million on conferences over the past three fiscal years. but the irs spent far more than that from 2007 2 2009. the irs at an astonishing $72 million on conferences. i know the scope of your inquiry as limited but it would be legislative malpractice if we do not bring mr. shulman and here to ask them to explain to us why from 2007 to 2008, the congress but it was

$39 and that it is more than doubled when we are going into a ecession -- was $13 milion and that it is more than double the me are going into a recession. it would be malpractice if we don't figure out what happened there. if we are truly going to get the cause this, we have to understand what happened to cause something to double. i'm almost finished. according to the irs spending data, the single largest increase in conference spending occur between 2007, 2008 by more than $15 million in a single ear. this is simply unacceptable and unnecessary. it may be difficult to find any good news today but at least there are an indication that things are beginning to change.

in 2011 after news broke about another wasteful conference held other general services and ministration in las vegas, the president issued an executive order that reduce travel and other expenditures across all federal agencies. i give you credit. a lot of the things have to do with what we did in this committee. in 2012, the office of management and budget directed agencies to reduce their travel expenditures by 30% below 2010 evels. it prohibited conferences over $550,000 without a waiver personally signed by the agency head. as a result, the inspector general's report explains the irs has now cut spending on conferences by 87% since 2010. we did that. we should take credit for.

i'm also very encouraged by the actions of the new head of the irs who was here would've today. mr. chairman, i agree with you. he is a breath of fresh air. he called me within hours of getting appointed and said one thing i will never forget. he said i will figure out what's going on among i will hold those responsible who are bad actors in the agency and he said i will estore trust in the irs. he is already taken significant action to begin restoring the integrity and the irs and olding people accountable.

he has a critical job ahead of him, one of the most damaging aspects of incidents like the irs conference in anaheim or the gsa conference and las vegas is that they hurt the reputation of all government workers who commit their lives to public service. it is a close, mr. chairman, i hope you will me in offering our committees the port - committee's support. as a said at our last meeting on the irs, we must dedicate ourselves to truth and trust. both goals rt three based on his actions today, mr. werfel is working to achieve them. yield back. >> we now welcome our first

township -- panel of witnesses, the honorable j russell george, the inspector general for tax administration. mr. gregory kutz, assistant inspector general for exempt organizations. welcome back. we know you had a big part in this investigation. we also welcome mr. fink, commissioner of the small is this and self employed division at the irs. pursuant to the rules of the committee, but all three witnesses rise, raise your right hand to take the oath. do you solemnly swear or affirm the testimony you are about to give will be the truth, the whole truth, and nothing but the truth? >> i do. like but the record reflect all witnesses -- >> let the record reflect all witnesses answered in the affirmative. there is one opening between the two of you, mr.

george. thank you again for being here. i know we will rely on you for a number of questions. we appreciate that. i also appreciate the fact that you created a relationship with the acting commissioner that i believe is going to provide a great deal of transparency without redundancy by ommittees. i like to recognize -- george, do you want to make any comments first? > yes. today's testimony highlights the results of our audit, a virus confident running for 2010 through 2012 --our audit of the rs from 2010-2012.

we received a specific allegation is excessive spending. verall, we found the irs spent an estimated $49 million for 225 conferences during this three-year period of our review. a conference in california was held at the marriott, hilton, sheraton hotels in anaheim in august of 2010 the cost of $4 million. the small business self employed division of the irs conducted this conference for an estimated 2600 executives and managers. is required at the time, the conference was a cute -- the conference was approved by the deputy commissioners of the irs. we cannot validate the accuracy of the $4.1 million concerns

cost because the i.r.s. did not to an eeffective controls track and report those costs. the $.2 million of the conference costs were paid from unused funding originally intended for hiring enforcement employees. as that of using the required irs personnel whose job it is to search for the most cost effective location for the conference, the irs used to commercial plan is to identify a site for the conference. these planners were not on the contract -- with the irs and had no incentive to negotiate a favorable room rate. they were paid an estimated total of $133,000 in commissions based on the cost of the rooms paid by the i.r.s. rather than negotiate a lower room rates, the planners requested 25 or more vip suite upgrades with amenities and the hotel along with the reception,

consummate drinks and daily breakfast and other refreshments. the agreement with the hotels indicated that a total of 132 suite upgrades were provided each night by the three hotels. for example, the commissioner and deputy commissioner for the small business division stated multiple mites -- state multiple nights and presidential suites at the hotels. other examples of questionable spending for the conference include planning trips costing $35,000, to video productions shown at the conference, local employees were authorized to stay at the hotel at an expense of $30,000. $44,000 in travel costs were ncurred for employees. gifts and trinkets were given to irs employees costing $64,000. $135,000 were expended for out hot -- outside speakers.

one of them was paid $17,000. this speaker created 6 paintings at two sessions. were given away, 3 were auctioned off by charity and one was reported as lost. of the reviews were conducted of individuals related to the conference was focused on potential misconduct. although the details of our actions are confidential ursuant to title 26 of the internal revenue code, we did refer an issue to the irs for consideration of the administrative action. overall, a review of this conference do not uncover any criminal violations. in conclusion, it is worth noting the irs conference sending -- spending dropped over the three-year period from $38

million in 2010 to $5 million in 2012. due in large part to increased oversight and control instituted. we did make for the recommendation to tighten controls and the i.r.s. has agreed to all of our recommendations. chairman issa, ranking members, thank you for the invitation to appear. >> thank you. mr. ink. >> i am the commissioner of the small business self employed division at the irs. i appreciate the opportunity to appear here today. i worked for the irs for 32 years, starting as a grade seven worker in ohio. i became commissioner of this division inmate 2011.

-- in may of 2011. i'm proud to be a irs employee. my division has 24,000 employees and accounts for the majority of the $50 billion that the i.r.s. collects in enforcement each year. we train 26 hundred managers from across the country. we need to ensure they have the tools to lead employees and adapt a major changes occurring. at the time, this meeting, almost 30% of the managers were new or only have been managers within a two-year period. another focus was employee safety. there have been an increase increase in the number security threats against employees. it is important to point out that we follow irs and government procedures that were in place at the time.

the treasury inspector general's office found in incident of fraud. we are now in a different environment and there are new procedures in place. in hindsight, many of the expenses occurred should have been more closely scrutinized or not incurred at all. ever not the best use of taxpayer dollars. given the new procedures, we would not hold this same type of meeting today. mr. chairman i would be happy to nswer any questions. >> thank you. i need to announce for both the witnesses and the folks that we expect votes momentarily. it will be a long series of votes and we could be gone for

up to an hour. i would ask the witnesses, we will make room available back there for you. we will come back immediately, fast as a bunny after the last vote. so as soon as myself or actually anyone gets to the chair we will recommence so we can get the day under way. i've been advised these may be the only votes of the day. i also advise you please return if at all possible if you don't have travel plans. i will recognize myself for the first round. >> as i show those, i want everyone to understand that these are suites that were pgrades. these are not uncommon for large conventions.

but we want to make clear is the allocation and how we pay for them is a big part of what the g is aware of. i've been honored it when i was chairman of associations to stay in one of those. it was comped by the hotel after a large bidding on taking that had taken virtually every room in the hotel. the room rates were below what he irs paid in that hotel. having said that, could we go the video and then we'll begin ith the questioning? this is a short clip. it won't be the whole thing but t set acetone.

[video clip] >> i am sure many will watch

them laugh. were you thinking this will never be seen or help it will look when it is seen? speak close to the microphone. you are not on. >> mr. chairman, those videos humor tottempt to use open the conference. the dance video was used to close the conference. they would not occur today based on the guidelines that exist. frankly, they were not appropriate at that time either. it isct of the matter is embarrassing. i apologize.

in the inspector general's report, there is not a clear delineation of the cost of both videos, but they are embarrassing. i regret the fact that they were made. >> let me give you a follow-up question. one of the most concerning parts atthe report is it appears the irs in this and other cases, we cannot count on proper accounting of what money is spent on what. there were many cases in which people traveled for conferences during this entire period and today in which if they simply billed as travel, it will not be seen as conference trouble. how are we to know, without receipts and even in missing painting, how are we to know that these kinds of changes have occurred to where there is an where moneyain of was spent?

to that question, there have been many changes at the irs. one of the changes is around the tracking of expenses around conferences, meetings, and training. for the particular conference in anaheim, we were only able to track 90% of the cost. there is a variety of reasons the other 10% were not tracked. because people do not use the tracking code in place. travel,re on other doing things of that nature. to not use the conference tracking code -- did not use the conference tracking code. they have charged their expenses for another business purpose. >> if i did it as a business and could not account for receipts, wouldn't your inspectors say disallowed?

>> our auditors with look at the records. >> we take very seriously the role that we occupy and ensuring people have the appropriate business records. this year, exactly provided, we in this example provided, only have 90% of the information as far as the expenditures. >> if i have local folks get hotel rooms and meals and so on and not issue a w-2, i made a fairly serious allegation. taxuld characterize it as evasion. fei company did not do it in do -- if a company did not it with employees, the law did not do it. essentially no accountability for this revenue to be taxed. what would you do in that case question mark -- in that case?

>> you have to look at each situation case-by-case. in that particular situation, we would look at the individual fax that existed -- facts that existed. we now have issued the b-2's -- w-2's to local travelers. after it was brought to our attention,we had not appropriately accounted for all the local travelers. >> i guess i will characterize it to you. it was not in the tax year in which it was earned so that employees do not voluntarily file as far as we know. knowledgeable people about taxes do not take out to say i have to pay taxes on this. the employer did not issue the required tax statements to itself. i characterized it as tax

evasion because they cannot just be swept under the rug. these were knowledgeable parties on both sides. dide found 7 people they not identify that were local that actually travelled. >> for with event planners -- i have worked with event planners. whether it was inside the irs or hired,there seems to be fed of hand -- a sleight-of-hand. the received a commission. more they spend, the more they receive. for got free rooms familiarization trips and irs employees paid for rooms. as far as i can tell, that loo

increased their commissions. what i understand, that increase their commission. >> mostly upgrade rooms they paid the per diem rate for >> have you looked at comparables for other associations? i was on other associations. have you done any work to figure out the comp? i do not want to cast blame on the hotels. it is not your job to make a dumb smart if you are on the selling side. i cannot find that there. i want to not cast any blame on various hotels. if somebody says this is what i want, it is not your job to make the dumb smart. like they couldn't potentiate -- negotiate the room rate down $135 -- >> they said they would pay the haveiem and wanted to various amenities. >> there was a mention of

.arious rooms and food provided per employees received full diem. you are not entitled to keep per diem if you did not have to use it because others provided meals. >> we did do a statistical sample. all employees in the sample got of $71 per day. there was nothing wrong with that according to federal travel regulations. >> it smells bad. >> we essentially probably paid for breakfast twice. >> it created a situation in which they got overpaid, basically. >> not technically according to federal travel regulations. from the taxpayer perspective, they got breakfast and the government paid them for breakfast at the same time.

>> according to your report, the irs conference in anaheim in 2011 cost more than $4 million. report does not identify legal problems, but it does raise questions about the way taxpayer money was spent. it raises questions about how the irs chose anaheim as the location for the congress -- conference. government event planners to identify the location. "the use ofstates the planners in this process increased the possibility the site selection did not result in the lowest cost to the government. coke is that right? >> that is correct. i am pleasedl you that you apologized. that is a major step.

it is important the american people know that somebody feels bad about this. let me turn to this. the committee obtained documents from the hotels that hosted the conference's, the conference in anaheim. one of those documents is an e- mail between two marriott employees. i want to read it to you and get your response. i want you to listen to this. "orlando and las vegas are out! this is fantastic news. $1 million less in trouble spent. the funding is there. they have been instructed to move forward." this e-mail sounds like the hotel employees were mocking you

and maybe even taking advantage of the irs. it says you could have saved $1 million by holding this conference in orlando. i have no idea if these employees knew what they were talking about or were just there rising. let me ask you, since you were the man in charge. how did you choose anaheim for this conference? did you look at other locations? were any of those locations less expensive? >> first off, i am not familiar with e-mail. i will tell you what i know was done at the time. we use a travel estimator. it was used by them and planning the meetings. we looked at over 20 different locations. we came up with three locations that could handle this size of conference, that would be able

--be logistically noncurrent not incurring additional costs, so we looked at those types of things that were in addition to travel estimator. it was over 20 different locations. we had to look at and make sure that we were not going to occur -- incur more expenses. it was a matter of logistics we came up with the final city. >> you said during this hearing that this were to take place today, it will be different. how would it be different? >> it would be different because represented cummings -- it would not occur under the restrictions. a conference of this nature would not occur today. conferences.

-- in 2010, there were two conferences. and 87% decrease thanks to the committee. do you think that was a good thing? >> absolutely. >> by d.c. they? -- why? >> the reason i feel was a good thing is to show we had increased our scrutiny. that we were paying more attention to how we were using a taxpayer money, and that we were taking a harder look as to what was the necessary training individuals were receiving. >> did event planners give you a cost-benefit comparison of the various locations for the irs chose which to use? >> i have had no interaction with event planners. i do not know if they gave an assessment. we chose the cities as far as looking in which cities would be appropriate, and we may the -- we made the final decision about where to hold the

conference. >> i would like to ask you about the room upgrades. as i understand, 142 hotels were rented that week. 132 rooms were upgraded. that is right. your report is not saying that the irs paid $1500 a night for these rooms. i guess they would normally go for. your poor is saying that instead -- your report is saying that instead of accepting these room upgrades, the irs should've negotiated a lower prices for all the rooms, or for the whole conference. >> that is correct. n'tmy final question, why did you do that? >> i was not aware that we had the ability to do that. as of today, i'm not sure that we could have done that. i do believe that we did pay the $135 per diem rate. in paying that, there were additional items that were

included by the hotels to use during the conference. >> thank you. i i wheeled myself or -- yield to myself for questions. we do have the vote going on. we probably have 4-5 minutes left. let me start out with mr. georgia. your report indicated that hundred 35 housing dollars -- $135,000 was spent on speakers for the event. was there any similar experience in spending the amount of money for a conference that you are aware of? >> i'm in the course of conducting this, we did not conduct previous conferences to this one. >> mr. cummings talked about efforts to rein in gsa. gsaad conducted reviews of operations and found that they

spent, not even a million dollars on a conference. outrageous spending was the determine. get negative outrageous spending was determined. we could not get much attention on that. -- outrageous spending was determined. we could not get much attention on that. >> are you familiar with this guy? this is the gsa official in the hot tub. have you ever seen that picture? >> i have seen a picture. >> i wondered if that was any motivation for the dramatic change in your spending. spent $37 million in that year. congress held these hearings come a which we participated in. but they -- the famous guy and the hot tub gave more egregious spending under control. this effect to it all? >> the new guidelines that were put into place, the new restrictions on travel, and on spending for training and things of that nature, that was handled primarily by the

operations support side. lex did you approve expenditures of four -- did you approve expenditures approved for the $4 million conference in anaheim? >> no, sir. >> you attended? >> yes or. >> afterwards, i understand you were promoted. >> i became a commission at the did i became the commissioner after -- i became the commissioner after the conference. >> i understand they got bonuses. is that correct? >> they were six bodices -- there were six bonuses that were paid. did you get a bonus? >> for performance, yes sir. >> did you -- are you where the -- are you aware of the money

they spent on this particular enterprise that paid $17,000, with his individual that is some sort of art expert, and produced drawings, paintings. >> i saw the in the report, i attended that session. >> you did. do you think that was a proper expenditure of taxpayer dollars? >> for what we're trying to do at that time, and based upon his expertise, the way he communicates, and the message --delivers through his >> i was surprised to hear you say that the paintings were auctioned and got less than $500 for charity. one is missing. maybe we should offer a reward. do you know where the missing painting is? " absolutely not. famous -- these were turned over to me by whistleblowers. these are the famous $20,000

drumsticks used in the las vegas conference. wasteful spending had been taken to a new level. now i see in your report you have fish as part of $64,000. -- anyone seen a scorching squirting fish? >> no, i did not. >> i am sure some of the taxpayers would love to know the federal government spent $64,000 employees atederal the conference. is that an appropriate expenditure of funds? >> i would answer that there the expenses incurred at conference that were inappropriate.

>> i would say the irs has taken with -- wasteful spending to an incredible level. it has to be dismaying to people were sending hard-earned dollars to the irs every week in their pay check, every month or every april 15, to find out their this way.been spent i think all of the $135,000 on the conference speakers, is that correct? >> that is my understanding. >> our goal is to hold people accountable. i understand some people have been suspended. some people got bonuses, like yourself, who were involved. the system has

been corrected to a degree partly because of congress bringing these items to the attention of congress and the american people. we have to recess. we will return. the committee is in recess. >> thank you. >> the committee will come to order. we will recognize the gentleman from ohio for 10 minutes. -- for 5 minutes. i thanknk you for your you for your tenacity, and making sure that we have the information to go to the oversight. one thing that struck me in looking at the review of this conference, what i call a budgetary slush fund trick. when i served as mayor for the dity, one way that we balance

the budget was by finding those slush fund budgeting tricks. this trick was something that we saw in the city. people were taking positions, and they were cannibalizing the money, and using it for items that did not have the same level of scrutiny. -- money would not being they had a budget proposal, it would never pass the scrutiny. but by keeping they can -- vacant positions open, they can cannibalize the money and use it for purposes that have a lower level of scrutiny and accomplish things like this conference print could you speak to that for a moment? we prohibited this practice. if you had an open position, that fun can only be used for personnel. if they were not, they were recaptured on the federal side. i'm concerned that this must happen across the board in the federal level.

there's probably hundreds of millions of dollars it could be recaptured if we recapture vacant position funding. can you speak to that? > i may differ to my colleague to elaborate. we did look at this issue. the money that was spent by the irs in terms of the unused money that was otherwise invited for -- provided for hiring enforcement officials, it was going -- that money would have been returned to the general treasury. they did have -- and incentive. some consider it a perverse incentive, spend money before it goes back to the treasury. >> if this money is not being user personnel, the money goes

back. >> so you do not get this slush fund that they used to do this conference. >> there are instances when money is limited to the sole purpose for which it was first appropriated. in this instance, that was not the case. i think we're going going to request that my colleague -- >> real quickly, this money was essentially transferred within the appropriation, which was not a violation of law. a i think i have seen on local level how it makes a difference. we need to do it at a federal level. across all federal agencies, there has to be these slush fund pods that do not meet the scrutiny level. >> we understand we have the swag bag from the event. this is in the future.

-- this says "leading into the future." we have a portfolio that says teamwork in action. these items were given to the artistic. -- given to the participants. oversees $2000 of these trinkets. listen to the ranking member who was so eloquent about the taxpayers dollars that were taken out of pockets of people who work very hard for their money. we note in the footnotes, what was in the swag bags is a included -- i think fuse about -- i am confused by saying this, squirtingscorching -- fish. i have been asked to take a look at this breed what purpose could-- at what purpose the irs have in giving the participants a plastic fish? a ghost with the ranking member

was saying about the party atmosphere. -- could you please tell me, what were these items for? what about the squirting fish redo why would people get a fish? question mark >> i honestly have no idea what the plastic fish was. that is being honest about it. the items that you referred to in the bag, when you look at the expenditures that were done for those items, we certainly as an organization should not have spent those funds. you --k you great i hope >> thank you. i hope you understand the irony. they would never be able to stand up in front of you and be able to say that. >> i now recognize the gentleman for new york. -- the gentlewoman from new york. >> the recent history of the irs is appalling. arecrats and republicans united at the wasteful

spending, the inappropriate behavior, and mismanagement of one of our most important agencies. putchanges that have been into place are dramatic, and they are having an effect. i believe you would agree on that. the top three most expensive conferences outlined in the report all to place in 2010, correct? >> yes. >> since then, the meetings have decreased by 84%. the cost has decreased by 87%, and the number of large meetings has decreased by 84%. --t is definitely will be in that is definitely moving in the right direction.

the spending on the conferences with 50 or more participants was reduced to $4.9 million in 2012. all good movements. i would say that the presence, the initiative to cut waste, to target wasteful spending has been very useful and appropriate in getting results. i was concerned by the videos that the chairman showed us. not only was a monumental waste of well over $50,000 of taxpayer money, but i would say it is an insult to the memory of star trek. [laughter] i could do a better captain kirk. i recognize one of the panelist s in the video. were you mr. spock in that video? >> yes, that is correct. >> how many government employees participate in that video?

in acting, editing? >> i apologize, i do not know the exact number. totalt sure what the number was that participated. >> to think this was a responsible use of money? question mark >> no, i do not. >> did you approve this? >> no. >> you did not approve it. i would like to ask mr. george, you did come out with nine recommendations. is that correct? >> yes. >> of those recommendations, how many have the treasury department accepted, and are supporting? >> all of them. >> they are all supporting them. all nine. the president came out and supported the recommendations. >> that was actually related to the review we did on the 501(c) four reviews.

i believe the president's spokesperson may have addressed the incident audit. i'm not completely certain. >> the treasury is now implementing all of the nine, or how many are the implement in? >> they are in the process of implementing all of the nine. i may differ to my colleague. gue.lea to my >> they were not in the other report. there is not in this report. -- there were nine in the other report. >> could you go over the most important nine in the 504 category? why the recommendations? -- what are the recommendations? >> the most important, probably, the backlog of organizations that have been there three years waiting for a decision am a yes, no.

one of the most important recommendations is to have those addressed quickly. one of the issues was whether or not the irs had evidence at looking at political campaigns. insome evidence that was no some instances, there was no evidence that it was a campaign intervention. make someone to wait years, you had better have a good answer for why you picked that case. those are examples of the most important ones from that report. >> when you say intervention, what would you define as intervention? define as intervention? >> deregulation is supporting or opposing a particular candidate running for public office. >> i would think that would be easy to do, see whether they bought time on tv ads. have you looked at that area? >> i do not know if we look at

that with respect to the 298 cases. intervention.e of 31% did not. deregulation -- the regulation was that you should make sure and document what you did that. lady's time has expired. the gentleman from tennessee is recognized. >> thank you. i want to tell you are very much appreciate the great opening statements you and the ranking member made, especially my friend, mr. cummings. i agree with everything both of you said in regard to this. a thought that to several years ago when the mayor of philadelphia was having trouble with city employee unions. he later became governor of

pennsylvania. he said the government does not work because it was not designed to. he said there is no incentive for people to save money so much of it is squandered. there is no incentive to work hard so many do not. the problem is that we do not have incentives to pressure people to save money. we end up with these ridiculous expenditures. we need to make sure that in the future, we put more incentives, more pressures, and more punishments for people to these types of things. exxon article yesterday about -- i saw an article yesterday about how it is also possible to remove a federal employee who almost impossible to remove a federal employee who messes up

in some big way. i also want to commend you, mr. george brady have done great work for this committee, and i appreciate what you have done. i feel the same way that all of these others low spoken before -- who have spoken before me, not just about star trek and the line dancing, but a $133,000 just to look at hotel, or figure out the hotel. irs employees could've done these things. thised to make sure that doesn't happen in the future. oftenat i see happen so when we go through these times, two or three years later, we are back in two these things again. we need to stay on top of that. that is really all i have to say. i yield back. >> thank you. i just want to be clear, when

hundred $33,000 was paid by the -- the $133,000 was paid by the hotel, not by the irs. but they had no incentives to reduce the cost to the irs, because the more the irs pay, the more they got. >> thank you for that clarification. -- i thank the gentleman. >> this is a long-standing problem. the worst year of spending for the irs, $15 million before the president even came into office. by now, or the take away from this episodes is that you learn from your mother and father when you study -- you spend

somebody else's money, spend more carefully than your own. that would go especially for taxpayers money. even if there wasn't as much, it is an excessive amount of money. i would like to get to the root as to why this conference, or this training was going on. the first thing i would like to ask is that anaheim. why was anaheim chosen? where do these employees rich in question were >> -- where do these employees originate? where did they come from? >> it was based on the size of the conference, the number of individuals attending,. >> where did they come from? hadhey came from -- we leaders in three-hitter 50 --

350 locations. they came across the united states. >> how many came from washington? >> i do not have the exact number. >> most? >> no. most not come from washington. --was at last -- with a less >> was it less expensive to have it in a place like this? it is a vacation spot. i'm not suggesting st. louis. i'm not going to wish that on the irs. would you respond? >> from the information at this hearing, we understand that florida might have been less expensive than anaheim. >> suspicion is aroused when sunny skies are paid. picked. skies are

you say they came around from the country. this was to be a training conference. the irs employees deal with highly technical roles and work. anyone could understand that. i want to take exception to my friends, who sees no redeeming value in line dancing. as a spans of national dance day -- national dance day -- >> i did not think he go as far as to disparage line dancing. just at this particular conference. >> you printed the admission i -- you preempted the one admonition i would have. >> i'm afraid i have no choice but to speak on his behalf. >> i just wanted to stand up for the line dancers. on --d they were doing it

not doing it on their own dime. but, let me ask you about this conference. here is a training conference. --i read today are poor, i as i read through the report, i would not find out what the focus of the conference. i could not put my finger on what the purpose of the conference in anaheim is. >> i'm going to do for to mr. -- fink to complete this response. there is no question as you noted earlier, there is a redeeming value for training. these are complicated matters. the irs is about to engage in one of the most comprehensive and unprecedented aspects of its activities in terms of implementing the affordable care act. whether or not that was an aspect of this conference, i will defer to mr. fang. -- mr. fink. >> was the majority -- how much

of the conference was devoted to screening? -- to training and fun? >> if i may, one key aspect in all the disclosure, my organization had a representative. >> this is important. i was going to ask you this. --wing whether irs employees not only were their irs employees there, there were employees of the inspector general there. >> we had one employee who was there. keep in mind, this was in the wake of the tragedy that occurred and -- in austin texas, when someone blew a plane into a building. sne of our senior investigator spoke at a session on security and threats to irs as result of people who were disgruntled. >> the time is expired. does anyone need to answer that question? >> i could go on. >> complete your thought. i do not want to interrupt you. >> all my employees traveled one day, arrived, and then

departed. the vouchers that he followed -- filed were $1000. arrived,ntly, when he dig in upgrade to a suite. to ad get an upgrade suite. there were no regular rooms available, which is what he requested when he first sought reservations at the hotel. the bottom line is, he was there to instruct irs employees on the threats being presented result. >> most of the training was devoted to training. >> i do not have the agenda. >> the time is expired. the gentleman from ohio. >> thank you. did doug shulman attend the conference?

>> yes. >> did steven miller? >> no evidence. >> did lois lerner attend the conference? >> no. >> did sarah hall ingram attend? >> i do not have the information. i do not believe so. >> to any other -- any other individuals from the tax-exempt division? >> there is no evidence anywhere in the the government was at the exhibit hall. >> you guys, your poor indicates there was money spent was $50ou -- there million spent in the three years. place thatces took individuals from the irs intended. did you look at any other conferences in detail other than the anaheim conference? >> no. >> there are two under 24 we do -- 224 we do not know much about. >> -- >> 14 of those were solely for the tax exempt division. the division a targeted

americans for three years for political believes. you not look at those at all? >> no. those were $2 million and told him -- in total. >> washington times indicates it was one of the most expensive. is that accurate? >> i do not know. >> do you know of the 14 conferences of the tax exempt division was a part of read do you know if doug shulman attend ed any of those? >> i do not. >> to steve miller? >> no information. >> lois lerman? >> no information. >> is it fair to say that the ohs would run in -- is it fair to say that they would be there at at least one of those conferences? ofit is likely some or one those would be there.

>> potentially all could have been at the conferences? >> they could, potentially. --i did notice that this and conferenceaheim there was a session entitled politically savvy training sessions. how to not shoot yourself in the foot. you have a note if that training did do you know if that training session was held at the other conferences question my >> i only know it was mentioned at the one you mention. >> do you have any information on any of these other conferences that were done between 2010, 2012 that you can offer to the committee? >> nothing that is in-depth like the anaheim conference. >> due to the as an appropriate thing -- to you think as an appropriate thing to check out? >> the people involved in targeting, it might be appropriate to know if those individuals were involved in some of these conferences? some ofuld look at

those conferences. that is something we would consider. agency that is out of control. ofnk of one conference out 225. we know what happened at this one with videos, gifts, not keeping receipts. what is more telling is at the same time this agency was targeting individuals for their political beliefs, we have the head of the agency attending the very conference where all this takes place. thes a fair conclusion that people involved in the division targeting americans for their political beliefs was involved in many of the other 224 conferences. ishink what is most chilling this is the agency that began targeting people for their political beliefs the very month

obamacare became law, march 2010. this is the agency that will be in charge of enforcing obamacare. they are engaged in this kind of activity when the bill also be in charge of enforcing the health care law. to me that is most troubling. that is why we need to get to the bottom of this. i would be happy to yield back. >> the gentleman just made a request. i want to make sure we are clear. you are requesting additional information or studies? >> i think it would be helpful. make it as an official request. i would want to check with the ranking member and chairman. >> i will be checking with the chairman, too. i i said from the beginning, consider it legislative malpractice if we do not look at 2008rom 2007 to

conferences, the price of conferences doubled. saying that president bush knew about this. he probably would have done something. we do need to understand that. we havely point was looked at one conference and uncovered this by the very agency that is going to enforce obamacare. other conference is going on in the same time frame. that is important. , itor the entire committee is the intention of the chair working with the ranking member to ask the gao to do a current event study of where we stand with conference and travel post- and after the good work of this ig and others.

i hope this will be the last time we are specifically looking at anything not forward-looking from 2012 on. i do think we want to look at how many reforms have been accomplished. mr. george, i think if you look find any ofnes and these past activities are still occurring, that you inform the new commissioner and us as quickly as possible. i do believe the gentleman is right. i believe gao looking government-wide will be more appropriate. i appreciate the opportunity to have the gentleman from massachusetts recognized. >> before we look at 2013 and beyond, i want to look at the last decade. this shows how the costs have increased. 2011, andovered 2010,

2012. if we look back at 2005, the irs spent $9.8 million. in 2006, it nearly doubled to $19 million. do you know what caused the sudden jump? >> no, i do not know what caused that jump. >> you were named deputy commissioner in 2008. >> yes, sir. >> let me ask you about the increase that happened that year. 13.4 on, the irs spent $ conferences. in 2008, the figure jumped to $29 million. that is the single biggest increase in those years. what caused the $15 million increase? you are siding, the definition of conference also

includes training. those years, we had significant hiring. we would have been treading a significant number of individuals in those years. we would have been training a significant number of individuals in those years. i would say that would be a contributing factor to the increase of costs. saying in that particular year when everybody got trained, you listed it as conference? >> my understanding is the definition the news around conferences also includes training. whichway to distinguish was which in your records? youf you have a breakout, individual the courses and training sessions.

you can pick out the technical andning for field employees campus employees. you can spot it out. >> you went from $10 million to $27 million in 2010. you are saying the reason it went so high was the difference was in training added in an counted as conference? >> part of it had to be due to training for new hires. >> what was the other part? >> that i do not know. significant did hiring in those years. that would have increased the costs. >> do you have any information to offer on these sharp increases in those years? >> only for the three years whereyou have mentioned they have had a significant impact. >> the only good news is after

debacle, the numbers dropped to below $5 million. i guess that is the case. these reforms were put in place conference.a >> the reforms at the internal revenue service started in 2010 prior to the gsa conference. >> why was that? >> i was not involved. it would be speculum to. >> we are spending less now than we were in 2005. is any of what we're spending now training as opposed to conferences? >> we are still doing training. believe training would be included in the $4 million. if you want to know why there is a sharp decrease, we're doing a significant amount of training virtually. the travel costs are reduced you

do not have that type of activity going on. you have people presenting and doing it virtually. onyou answered my question technology. >> included in this conference is what is called the tax forms forums where the irs gathers tax preparers to update them on changes in policy. there is a tremendous benefit to the entire system of tax administration for the irs to conduct these as these taxes,uals who prepare to make sure they are up-to- date on what the tax laws are and what to be aware of.

we receive many leads on people abusing the tax system as a result of these tax preparers learning what is or is not permissible and coming forward to us with those types of leads. of how important a functioning internal revenue service is to this country, we have seen countries without. tax collection and what that means to the nation. it is something we have to get on top of. the matter of trust is essential. we will keep on that. isquickly following up, there a possibility since the exhibit does not reflect conference spending at all, is there a possibility that you would provide to us a breakdown of what portion was billed as conferences, and

so on? i think it would be helpful. we want to make sure the record is complete. i will leave the record open to get that so that we are andaring apples to apples conferences versus of reach to the public purse is trouble for training. gentlemanciate the pointed out that we are now taking more college two people. >> we would have to rely on information provided by the irs itself. >> the next panel will probably help with that. >> i agree. >> the gentleman from utah. >> thank you for having the foresight to call for this. , how long have you been at the iris? >> 32 years. >> i suspect you have been to some conferences along the way. >> yes, sir. >> how would you compare this

conference to past experiences? in my career with the internal revenue service, it is one of the largest i have ever attended. it was not uncommon in past years that you would have large leadershipof the team bringing all of the managers together in a function. >> what did you personally get when you went to the conference? what did you personally receive? >> for the anaheim conference? is what i got. i have paid the government rate and stayed in a suite. i got the bag. there was a notebook inside. i also believe i received an ards.hment to lany

>> any other benefits? food? >> i believe if you look at the there and the report, were 25 baskets of fruit in each of the two primary hotels. >> how big was your room? did you ever stay in a room like that? >> yes, i have. i have paid for a room like that personally. i would also mention in another we had reserved most of the hotel. it was a very large conference. i was given a suite not quite that large. most recentve the memory of was in chicago. >> when was that? -- i woulde it was

be speculating. i believe it was in 2009. >> because of your rise in rank and because you believe you were entitled to this? why did you get it? >> my understanding is it was part of what was negotiated with the hotel as part of the arrangement for us taking a significant number of rooms in the hotel for the conference. >> when did you think this was wrong? >> the conference in general? >> yes. >> i think we should have been paying closer watch to our expenditures and expenses. i do not think the conference itself was wrong because of the time we were in at the internal revenue service. 30% of our managers were new. we were going through difficult time trying to get our leaders

to recognize -- >> when did you think something was wrong? ever think something was wrong? abouto you think is wrong this picture? >> i think in retrospect and looking back, if you take a look at the expenses, we should have been more diligent in our responsibility to the american taxpayer. >> you were in charge of this group? >> at this time, i am. >> you were the number of two at the time of the conference. when did it strike you that this was wrong? >> as i said -- >> when you got called to testify before congress? >> no, server. >> as i said, i do not think the conference or premise was wrong because of the need of our employees at that time.

>> when did you become aware of the massive expense? >> i did not become aware of the massive expense until much later. i did not know what the expense was a time of the conference. >> you are the number of two person in that division? you are oblivious to the expenses? you are totally ignorant of the expenses? >> i was not involved in the plan in an execution. >> who was? >> they put together a planning team. >> we know what the party planning committee is. when did you realize that it was wrong? >> if you look at the inspector general's report -- >> no, i want to hear from you. you are in charge. this is what is infuriating. you are in charge. you have a public trust. you are paid by the american

taxpayer to be responsible, to be respectful, to have knowledge, to have oversight. yet, you cannot even tell me if you think this was wrong. in fact, you are saying this is a pretty good conference. >> i would like to hear an answer to the question. >> i would say the documents we saw on the conference, it was authorized by two deputy commissioners. this was an april 2010. >> clarify that for me question my >> mr. fink sign on this? -- clarify that for me. mr. think signed on this? >> for estimated $4.3 million conference at that time.

>> when did you realize this was wrong? you sign the authorization before it happened. >> two minutes for questioning. >> i do not know the collective we is. >> that will be noted for the record. >> you personally sign the document, with the dollars on it come up before the conference. would you agree? >> i signed -- i initialed the statements. >> what does that mean to you? the of any responsibility? >> -- >> that include the cost of the conference question mark likes conference question mark >> that included a discussion. >> you do not think that was wrong?

>> because of a we were experiencing. >> what was that? >> i hold the taxpayer base -- whole new taxpayer base. >> you testified, you thought it was wrong when he be came -- when you became aware of the expenses. you participate in meetings understanding the cost before the conflict happen. no you here climbing responsibility in this? >> absolutely not. >> the gentleman's time is expired. if i heard correctly, i could have a red back, you answered you were not aware of the cost of these, and then you made it

clear you signed -- attended briefings in which a new cost. the july to revise your initial statement? -- would you like to revise your initial statement? moreant to be much accurate. did you know about costs? when? i do not want to trap anyone. i can't square those two right now. >> i was aware of the cost when we did the estimated cost of $4.3 million. that is when i became aware of the estimated cost. >> there maybe additional questions. i think the gentleman for utah -- i think the gentleman from utah. >> he lost a member, because he had to get out of here. can we have an additional five

minutes? >> if you find a witness who is a potential liability of perjury. the gentleman is recognized for five minutes. >> weight. wait a minute. i just asked for equal time. we have a member who had to leave. i did not object to -- i want to hear the answer to the question. add nothing to do with perjury. i'm asking for equal time. i think that is not unreasonable. >> it is not a role of the committee. >> thank you. references report three trips that multiple irs employees took in november

2009. june 2010, august 2010. can you elaborate on why three separate planning trips were needed for the anaheim conference? >> yes. i can elaborate. they were two separate trips pretty third trip was actually done the week before the conference to make sure that everything was set up and ready to go for the conference of that size. i think in retrospect, looking at those trips, and what occurred there, absolutely we should've used local individuals to conduct those planning trips. it was very easy to have done that by using local

individuals, as opposed to traveling to anaheim. >> did you approve these trips? >> no sir. >> do you know who did? >> the then sitting commissioner. >> the report says that it is not identify any policy telling reasons why planning trips should be performed for conferences. the appropriate number of employees for approval in advance -- what his response? >> in reading the report, at that time, i believe that is accurate. there was no criteria or guidance at that time around those planning conferences. since then, we have made changes. stricter, tighter guidelines

around those types. >> one -- what level of approval is needed for these trips? >> i do not know. i can get that for you. >> the ig report concluded the costs associated with these planning trips may have been excessive based on a number of employees who were on file. how many people were on each of these planning trips? >> the november 2009 trip includes three staff, and cost $3500 of travel. when mr. fink described is a week before the conference, 16 staff costing $22,000 in travel. the majority were from washington. >> i'm astounded. it takes three trips to go and plan a conference. i do not understand it. why were so many people needed? >> the primary reason is because of the size of the the number of

individuals attending, setting logistics of the conference. as i did state, in retrospect, when you look at it, it was unnecessary. >> it is almost like, how many people does it take to change a lightbulb? your report raises a concern that appropriate personnel did not sign letters of intent. the letters of intent are used by irs to secure hotel space for off-site. these orders are normally required to be signed by centralized delivery services. however, in the case of the conference, a general schedule 14 officer in charge of

planning assignment as a result. do you know who authorized the letters of intent? >> the gs 14 did sign contracts saying he was ok for him to sign because it was not a binding agreement for the eternal revenue service. that is what the agreement was that was used. >> those were the concerns raised, i am sure. by the fact that this revenue officer was the one signing the letter of intent. is that correct? >> yes, congressman. >> why was a revenue officer permitted to sign that letter of intent? >> i believe that it is because he had been involved in planning activities on other conferences. he had some experience and knowledge, and he had corrugated this with the centralized unit. >> did the same revenue officer

who signed the of intent with the hotel to the outside conference letters who planned the conference you go is at the same person? >> to the best of my knowledge, yes. >> had he planned previous conferences with the same planners? >> that i do not know. >> my understanding is yes. >> ok. under what authority did they sign these justifications? >> i believe he was asked to do that by the sitting commissioner of the small business division. i believe he was instructed to do that in coordination with the planning committee.

>> mr. george, do you know where he stayed during the conference? >> i do not have that information. >> he stayed in presidential suite for six nights. >> mr. george, your report states six employees were given awards totaling $6,000 for their work on the anaheim conference including $2000 for two employees who are responsible for coordinating the conference planning. did the gs 14 revenue officer receive one of these awards? >> minder standing is that he did. he received $2000 for the conference. >> and who approved these awards? >> i am not sure. >> have they received any previous awards for work

planning conferences? >> we are not aware of that. >> i wonder how much work the gs 14 did when you had an outside firm to in the conference planning. how much sense does that make? >> i am not amount -- aware. i do not have specific knowledge. >> i'm going to yield. >> thank you for your courtesy. i appreciate it. i want to go back, the chairman and i were talking and i have a tremendous amount of respect what to you said to me a moment ago, we are not trying to get anybody in any trouble with regard to perjury but we want to make sure. that is why we want to be clear on this. rogers a committee where clemens testified in the next thing you knew he found himself in some trouble.

we want to be clear. ofyou did have knowledge this anaheim conference and how much it would cost before it happened. >> yes. >> and so you sign some documents? did you look at the documents? the cost of this? what was your -- how did that work for you? what happened? routingi signed the slip i was given all of the documents in a binder and then i went through that binder and looked for what was indicated as the estimated cost of the conference.

and then i initialed off on it because we had wreaked the deputy commissioners and forwarded that to the deputy commissioner. >> so you were aware. did you think that cost was high? did you ever say that to yourself? >> i did not. >> looking at it in richer spec, do you feel that way? >> yes, we said -- in retrospect, do you feel that way? >> yes, we could have saved money. >> did you ever say to yourself, maybe this is not right. if somebody sees this, taxpayers are not going to like this? >> absolutely. after i saw the production, as i mentioned, i fully regretted it. >> to this day, i have to ask,

do you see the redeeming value in that video? >> no, sir. >> so you agree with me. thank you. >> i thank the gentleman. wahlberg. >> thank you for laboring on this oversight, not to just this particular issue, which is tough to look at, as a taxpayer and a citizen and a representative. it reminds me of early morning walks in and my barn and turning the lights on after dark and hearing the sounds of scurrying things going to the corners because the light is being turned on. mr. fink, i am not so concerned about how you feel about it now.

or even how you felt about it back then. i can't confirm one way or another. i certainly understand the embarrassment you must feel about this taking place. i appreciate the apology. but it is after-the-fact and i am certain that the biggest reason for the concern now is because it has come to light. you have made apologies, you have said there are measures being taken so this does not happen again. what type of confidence you have that is truly echo that measures are in place to make sure this does not happen again, that there are things we do in light of the fact why taxpayers are going through right now, that this has changed? >> the confidence i have is based upon looking at how significantly all of the cost have dropped based upon what the inspector general has reported.

that gives me tremendous confidence. i also have confidence in the fact of looking at the changes put in place and i have cannot -- confidence because the acting commissioner has come in and he has spelled out what his expectations are and when this came to his attention, and he spelled out he was appalled and he looked at the expenses and saw the videos and it troubled him. that gives me confidence it would never happen on his watch. >> in the culture, i would agree with the chairman that the majority of employees are doing their job and are doing it to the best of their ability. but here is the culture, numerous people involved with the videos, understanding it and the culture said, who cares? we can do this because we can do this because we can. and it happened.

when i sit in the situation where a 59-year-old lady, a single parent calls and says i have been told by my healthcare provider, she was a home healthcare worker, she's being cut back back because of obamacare. the irs responds with administering major portions of obamacare. and we see the culture that allowed this to go on without respect for that 59-year-old mother, single-parent. who is now concerned about losing her home because she does not have the hours she needs that she had before. and we hear what goes on in this culture. i am concerned. mr. george, you received notification of this problem from a whistleblower?

>> i used that term generically. didas an irs employee who alert us to the fact of excessive spending. >> there was one person that was willing to step up to the plate to say we think there is a problem. in fink, i hope the culture the irs, and even if it is just because she got caught, is changing to say this will not continue, even after the light of day has been turned off. i have in my hands a copy of a letter that was written to the secretary by senator coburn. ultimately responding from a

letter he sent in april of 2012 to tim geithner asking for a listing of all conferences attended by employees during 2010 and 2012. attended by 50 or more treasury staff. there were only five conferences with a total cost under $500,000. subsequent to that, costs including the largest component of treasury, the irs, $50 million on hundreds of conferences over three years. there are questions, why weren't we given the information? i would ask mr. george and mr. kutz, has the culture changed so that even from treasury we will get accurate information to congress? and we won't feel we have been given in accurate information. in fact, even truthful information. >> you may answer.

changed,vironment has mr. wahlberg. no question about that. that was not top priority for the administration in the wake of the gsa revelations and then of course with this report. it is obvious this is a major issue. it is something the administration has taken steps to address. there is something important i need to note. as we have pointed out during this testimony, new policies have been put in place. the key is to make sure they are being followed. if they are not being implemented and open in terms of what my office does and what managers within the irs do, it could be for not. >> i think it was notable what

he said, in the past it did not seem that important. to the treasury secretary and others responsible for this that has to change. >> and i hope it will. >> we now go to the gentleman with more federal workers in his district, mr. connolly. >> that is probably true. mr. george, there was a time, as the ranking member pointed out, where the amount of money spent on these conferences in one fiscal year. what was going on that it would doubled? >> i do not have that information. >> we just looked at 2010-2012.

>> you are out of the room when we discovered these numbers are combined. they are conferences, travel, training, and others in the next witness will confirm that we have asked to have them broken down because a substantial amount of this was travel related to training of new employees. >> it could have been we were upping the training of new employees. i thank the chair. mr. george, the irs contacted with 15 outside speakers to prevent -- present for a total cost of $135,000. one speaker was paid $17,000 for two presentations. the report stated the contract signed by the irs said "in each presentation he will reinforce his message of on learning the

rules, breaking the boundaries, and finding creative solutions to challenges." the speaker purrs -- painted six paintings, including subjects like albert einstein and michael jordan. >> among others. >> do you believe paying a speaker $17,000 to paint pictures was an appropriate use of taxpayer dollars? >> i do not. >> either of the two of you can weigh in. >> i would agree. >> why did the irs higher this speaker-painter? >> the individual had spoken to numerous private sector companies and other government agencies and the way he presents his information, he picks the subjects to do a painting and then talks about their leadership, their characteristics. what it ties to as far as doing things differently is the way he goes about doing the presentation. of course, you can't recognize the image.

in some cases he will actually paint the image upside down and he talks about what their characteristics were or the challenges were they faced and how they had to overcome certain challenges. mentionedit was michael jordan, he basically spoke about his drive, the fact he was committed to being the best and always trying to improve.

that is how he does the painting and he relates that around what you would hope would be positive leadership characteristics. >> i guess i understand the principle and it is easy to dismiss it. but when we are trying to be good stewards of taxpayer investments, especially when our mission is to collect taxes, it strikes me as a less than judicious use of taxpayer money and this is the final question of all of you, it shows a culture of arrogance and tin ear. those of us that run for elected life as we ask ourselves, how would this look on the front page of the morning paper? if the answer is not so good, smart politicians don't do it. it looks to me this question never got asked. it was well-intentioned but one

has to judge it on a range of insensitive and -- insensitive to stupid and not a wise use and their were other ways to do that without becoming an object of ridicule and enormous anger by taxpayers. if the chairman would allow the panelists to comment on what appears to me and others as a culture of arrogance to the concerns of the public. >> i agree with everything you have said. and i know this term is overused but the optics, there seems to have been a lack of regard in terms of how this would be perceived by the american people and the times we find ourselves in. >> this is a case of people that lost a sign of the fact they were spending taxpayer money and not their own. >> i agree with you.

it is not a matter of fraud or embezzlement. it is a matter of stupid judgment. back,i have said looking in roger specht, this was not a good use of taxpayer funds. it was inappropriate. we should have went about this in a much more judicious and prudent manner than we did. >> i thank the gentleman. thehe chair recognizes gentleman from tennessee. >> i think the panel for being

here today and i would like to say we have had several hearings regarding the issues surrounding the irs and when you started your testimony the one thing you did was you sincerely apologized. you showed remorse and i think you are genuinely embarrassed, unlike your predecessor who, when asked when he was sorry, i think we got a backhanded apology he was sorry it happened under his watch, which i interpret the is embarrassed because it makes him look bad. i appreciate the fact you seem to care and a lot of people do as well. let's look at what the taxpayers got for their $4.3 million at this conference in anaheim. can you tell me the purpose your division was therefore at this conference? >> yes. if you don't mind, i do regret this. i really do. the main reason was we had a

significant turnover in the leadership in the organization. also we were experiencing an entire new customer base in small business. people that did not have tax problems before, were coming in to interact with the service and were having difficulty remaining in compliance. and the third item, as the inspector general mentioned, we had an increase in security concerns out of the incidents in austin, texas. >> you have the term of the purpose for this, continuing education. do you believe it occurred at this $4.3 million conference? >> i apologize. not in the video, the dance video. their word learning lessons.

>> you have methods of tracking this. you said they are there for three days, eight hours a day, how did you keep track of these attendees? what did they do to get credit? >> they did not get credit. we were not keeping individual track of their attendance. they did not get credit. all they got was on our system, they received what would be characterized as leadership. >> was their video, sign in sheets? >> there was not. >> we have all of these people with no accountability in terms of whether or not they actually gained any new knowledge on this particular trip. we don't know whether they crossed the street and went to

disneyland during those eight hours. >> i can't sit here and say they did not. >> did you know of people that did go to disneyland? >> i do not. >> did anybody talk about it? going other places? rather than being at this seminar? >> no one has talked about going during the seminar but people did go places in the evening. >> so we could not account for the 2700 people. this was probably an abysmal failure. we don't know if they were educated. so this was not a good conference. we have 224 more of these to look at. when the american people don't listen to the irs, and they do not pay their taxes, they can

go to jail, what do you tell the people the retribution might be when their money a did send is wasted in this fashion? is there any way to recoup this money go >> not that i am aware of. other than apologizing. >> if they don't pay taxes, they can apologize but they can still go to jail. mr. george, if mr. showman perjured themselves, should they go to jail? >> it would do 10 -- depend. >> he said he never had a discussion about the targeting. lois lerner knew more about these agents. if they were not truthful for us, should they go to jail if they don't comply? >> they should be subjected to the criminal penalties. >> i would say it is up to the

department of justice. wepeople get frustrated never seemed to get accountability but it sounds like we are getting some. i yield back. >> the chair recognizes himself for five minutes. i will say this, i prepared a list of questions for all three of you. openingng the statement, my mind went away from the questions and went back to south carolina and in the very same month, the very same year, the irs was in anaheim, we were furloughing law enforcement officers. we were furloughing teachers. prosecutors in my own office were furloughed. secretaries in my office. those are secretaries are struggling to make ends meet

under the best of circumstances. and we are asking them to go two weeks without pay and we canceled all out of town training. we brought our own food to our thanksgiving and christmas office socials. we started an anonymous fund to help our fellow employees struggling to make ends meet. and one night one of my secretaries came in after hours and asked if she could borrow the money to buy her child a birthday present.

and she kept apologizing for having to do it. she kept saying, i will pay you back. i will pay you back. at exactly the same time that young single mom was a darling money you a child's birthday present, other government employees were staying in a $3500 a night rooms. other government employees were spending more money on promotional materials than that young woman makes in a year. and other employees were spending more money on audience participation tools then that woman makes in a year. so i appreciate the work you have done. trainingis not a issue. this can be solved with another one more recommendation, if we could just get a recommendation implemented. formone recommendation people asking responsibly. we can adopt all of the recommendations you can conceive

of. cultural, me, a systemic, character, mauro, issue. the irs has been exit -- in existence either since 1862 or 1918. they have had 100 years to figure out that while your fellow americans are losing their jobs and their health insurance and their homes, you do not spend $4 million at a conference for which there is no accountability. makeon't hire people to meaningless speeches were artists to paint paintings of bono, when your fellow citizens are struggling. that is a character issue, training cannot fix that. aey sent 25 employees on

scouting trip. to see whether or not the hotel was ok. that is not going to be fixed with training, mr. inspector general. when you have law enforcement officers being for load and you had one years how to figure out how to act appropriately, you don't need a report to tell you spending $27,000 to talk about how random combinations of ideas can drive innovation. there's not not a webinar in the world that will fix that. it strikes me we need one recommendation. start over. this entity has targeted citizens it was supposed to serve and allowed itself to be used as a political tool. not only doesn't have access to our financial information, it will have access to our health

information. those are details we don't share with people we trust. and we are going to be asked to share it with people that are so disconnected as to spend this amount of money while our fellow citizens are struggling mightily in the fall of 2010. i do not think training is going to fix it. i think replacing it might. i would recognize the gentleman from north carolina. >> thank you, mr. chairman. thatt to follow up on because it is hard to go back and talk to the people back home that have lost their homes, lost their jobs, and with any

clear conscience at all, justify any part of this behavior. frankly i find your apology today hollow. it is not enough. you are an honorable man. i am troubled by the lack of information provided to the inspector general's office. theyk at this report and can't draw a conclusion because you can't divide them with documentation. we don't even know what the total cost of this conference was. it has been reported that was four point $1 million but i have done the math. it is more than that. there is no way. what was the cost? do you know? >> the cost i am aware of is $4.1 million. >> i think they would concur

with me, there is no way that is accurate. because if you look at the basic numbers, we are at 4.1 million dollars on the amount of documentation. if you take 2500 employees in travel vouchers, if you do the math, you are at 4.1 before we figure in anything else. you can get to 4.5 almost immediately. your testimony said 90% was undocumented. you are only able to document 90% of the cost. how do you know that if you don't know the total cost? how do you know the testimony here today is accurate? if you don't know the total cost.

did you make it up? >> the 90% is based upon -- >> i am asking year. it was your testimony. >> based upon the overall cost. >> you only have 90% of the documentation of the $4.1 million. >> that is correct. >> it could be $5 million? it looks like it probably was. could it be $5 million? >> yes. >> $6 million? knowere is no way i would that. >> it could go higher. absolutely. >> what surprises me is a guy that has been paid 32 years to hold the american people accountable is not accountable

to those same people when he is documenting his own costs. why is that he the american people want to know. why is that? >> there was no guideline or requirement to track cost for that particular conference. we implemented the use of that code to track the conference expenses. >> yesterday you met with senate committee members. >> their staff. >> and in that time, the general consensus was you did not think the $4 million was a problem. your testimony today is you have had this path -- epiphany was a problem. but yesterday they did not think you saw it as a problem. when did it become an issue to you? >> it was an issue with me yesterday. if you look back in retrospect, we could have done better for the american public and we could have been more effective. >> more accountable.

men we get to it, let finish, you also say all of this was done because you had 30% new hires. theyou assure us today of 30% new hires? that is why you said it was large. >> that was one of the three reasons i stated. they have less than two years experience. >> i have done the math. one out of every two was a management higher? that is 800 new people if you take 30% of people that attended the conference. one out of every two hires was a management person? >> i apologize. when i talk about 30% of the managers having less than two years experience, that would not include the numbers of new

hires for that particular year. the new hires were primarily front-line customer employees. we hired 1516 employees. they would not have been attending the conference. >> i can see i am out of time. i appreciate the indulgence of the chair. i have one other question. yield back. >> the gentleman from michigan is recognized. >> mr. george, after reading your investigations into what is going on at the irs, with the excess spending on conferences we are discussing today and the targeting of conservative groups, i can't help but sense the irs is out of touch with the average american citizen they were hired to serve. during your investigations to you ever come across anyone in the irs that felt disdain for the average american? is there a feeling of contempt

for the american people as if they were somehow unworthy of the irs? >> i cannot say our reviews would lead to that exact conclusion. i can say there was in this instance and in the instance of the 501(c), a lack of management, a lack of oversight by management of what was going on at the rank and file level. we are continuing our review of the 501(c) matter. definitivee you a answer but in this instance, as mr. fink acknowledged, there was a lack of sensitivity as to how it would be perceived by the american people and i would presume to add to the fact managers seem to have had a lack of concern about how they would be perceived. andumstances have changed

the gsa revelations, the subsequent actions taken by the irs officials and i the administration of the highest levels have also affect did the behavior of government agencies at all levels on this issue. >> there are tens of millions of americans who would love to be paying taxes and can't because they are out of work. millions of young people, many with college degrees in student loans to pay and can't find jobs. millions more are underemployed and barely getting by. i tried to ask this of most of the agencies before this committee, when the irs is looking at conferences or other

ways to spend our money, does it consider the current suffering experienced by its fellow citizens? >> at this particular time, part of this conference initiative, was about the were havingthat difficulty with complying with their requirements. that is why we brought our leadership together so we could convey the message that we have to understand the taxpayer's perspective. shoese to stand in their so we can better understand what they are experiencing when they're interacting with the irs. that is what it is. it is difficult with is coming

to light, it does tie to what you are talking about. our agency is going through a time where we are furloughing individuals for five days and then you have this event come up and while you can use excuses and say this was new money, it is equally difficult to our own workforce we are getting five days off being furloughed and not being paid. and you spend this in 2010. >> i understand. have you ever heard the saying it is better to ask for forgiveness than it is permission? in your circles?

heard that before? >> yes. >> as for your apology, i will trust you but i will verify by watching the irs very carefully. >> will the gentleman yield? >> mr. george, can i pick up, on page five of your report it talks about the transfer of the three point $2 million. is that a transfer or a reprogramming? >> it was a transfer. >> i think it was a reprogramming. >> and you check on that. -- can you check on that? >> we will do so but our understanding is it was permissible. >> it was a reprogramming. transfers require previous approval from the appropriations committee. >> we will confirm that. >> i yield back. >> we have heard a lot about the conference and what happened and

how important it was for people to get together. i have no problem with conferences but do you know the attendance, how many people actually attended the workshops? winterson there were eight hour days, is there a list somewhere of how many people attended? >> we do not. >> there was no headcount. each workshop they attended, how many people were in the workshop? >> there was no roll. >> as i go through the list, it is ironic of the workshops that were held at this event. teleworkthem, making work. we have all of these conferences in 2010 and all of these people together for this expensive conference and they have a meeting about telecommuting. several years later, our is much less because we

are making that happen. political savvy, how not to shoot yourself in the foot. or unintentional intolerance. don't be so nice. this is the other one. why doesn't somebody do something? the all that happened with nonprofits, it is ironic in the middle of this conference there is training about receiving other people and speaking out when you see a problem but apparently no one spoke out and saw a problem. authentic conversations. bringing someone in about authentic conversations with people and the amazing one to me

is the $10,000 to pay someone to talk about intolerance. when at the same exact moment the irs is in another area isolating people that are conservative groups. we are paying $11,000 to teach people not to be intolerance. it is ironic to me, as we walk through what occurred at the conference. you know this has to shift and it will. changes are in place but accountability is important in this process. thank you for your testimony. we need to be able to move on to our next panel. i would yield. >> we will be dismissing this panel in a minute but first of all, i think the gentleman for yielding. mr. fink, i wanted to say something to you. i know this has been difficult. you have a family?

are you married? do have children? my remind me of people in own district. but i have to tell you something, i am glad you came with the attitude you came with. i think that was the gentleman that said he appreciated you came with an apology. we watched ms. lerner come in plead the fifth. shulman came and basically broke doped -- rope-a-doped and rather insulting what he did. but you came and you took some tough lows -- blows and you are honest and you laid it out the

best you could. and i just want you to know i appreciate that. i appreciate you doing that. and i really mean this, the fact you are remorseful means a lot to me. and i'm sure other members of the committee philly same way. i am just hoping that -- feel the same. i'm hoping that other people in your department will book, and others made mistakes, but i'm hoping there is a lesson in this. when things don't look right, somebody says, wait a minute. hold on. doingwe should not be this. i realize a lot of times when a person does that they might be criticized but when i look to that list of things the gentleman mentioned, half of them talk about leadership. speaking up, being a more

effective leader. and i think what you have shown here, you have shown leadership and i believe this is a transformational moment and that is what you have said. i do not think the irs will ever be the same. but he will be a better organization. -- it will be a better organization. we will be looking at it through a microscope. thank you ray much. >> mr. fink, we have all made mistakes in life and your attitude has been appropriate. we appreciate that. and i want to thank our witnesses. we are going to dismiss this panel. we will be in recess for a few minutes while the staff gets ready for the next panel. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013]

to order. we will welcome our second panel, mr. danny werfel, the acting commissioner of the irs and has been on the job almost two weeks. with that, pursuant to the committee rules, we would ask you raise his right hand. testimonyar the you're about to give will be the truth, the whole truth truth, and nothing but the truth? klees have a seat. -- please have a seat. the witness answered in the affirmative. the procedure we use today is not the ordinary procedure. we would normally put members of

the administration first but i think it was agreed that this receipt or made a lot of sense. and with that, you're recognized for your opening statement. >> thank you. chairman issa, and members of the committee, thank you for the opportunity to appear before you today discuss the work we have already done and will continue to do to reduce travel and training expenses and to ensure proper financial controls are in place over meetings and conference approval processes. the 22 and manager meeting held by the small business division in anaheim, described in the inspector general's report, it is an unfortunate vestige from a prior era. all there were reasons for holding the meeting, many of the expenses associated with it were inappropriate and should not have occurred. taxpayers should take comfort knowing that these kinds of

expenses are no longer permitted and such a conference take lace today. -- place today. new spending restrictions have been put in place at the irs. as a result, travel and training expenses have been dropped by more than 80%. we have limited employee travel and training to mission-critical projects. in fact, costs related to large meetings dropped 87% between 2010 and 2012. large scale meetings like the one in anaheim have not taken place in 2011, 2012, or 2013. under the treasury department, the irs has taken steps to ensure travel and conference spending is appropriate,

limited, and undergoes a review and approval process. this is an ongoing effort and we continue to examine areas associated with training and travel costs. as the acting commissioner, i will do everything possible to make sure tight spending protect the use of taxpayer dollars and i look forward to working with the committee on these efforts. our work in this area is one part of a larger effort to chart a path forward. this is a very challenging time for the agency. especially in light of the inappropriate actions recently brought to light regarding the 501(c) application process. i look forward to discussing that issue with this committee as well. i intend to ensure we are putting in place the appropriate measures to hold individuals accountable, addressing processing of applications, and review the oversight mechanisms at the irs. i am reviewing the full range of irs operations, processes, and practices to focus on how we deliver our mission today and

how we can make improvements and future. that way we will develop a better understanding of organizational risks wherever they exist with an irs. for example, in line with the report on conference expenditures, we must make sure we have the right controls in place to prevent wasteful or in a per -- inappropriate spending. where we find management failures or breakdowns and controls, we will move to correct these problems quickly and in a robust manner. yesterday i took action against two employees after i learned of inappropriate behavior. the ig forwarded information during a party during the 2010 conference where food was provided free of charge in violation of government ethics and standards. two irs employees have been placed on leave and we have started the process to remove them, pending further review. i would like to be as

forthcoming as i can with the committee with respect to these individuals. but because of the process has personal implications, there is little else i can say publicly at this time about that process where the people involved. on all of these efforts, i have described above, we will report to the president, the treasury secretary, and the public by the end of the month and give a progress update. we have a great deal of work to correct the serious problems have occurred at the irs and to continue the important work of the agency on behalf of the taxpayers. in a few days i have been in the the irs, it has become clear the agency is populated by thousands of dedicated public servants that are committed to carrying out the mission. it is an honor for me to serve alongside them and i'm confident together with congress and other stakeholders, we will address the current challenges and move forward with the indispensable work of this agency.

thank you and i look forward to your questions. >> thank you. i recognize myself for a round of questioning. the two individuals that have been placed on administrative leave, in spite of leave standards, they are available to transcribe interviews? is that correct? you can give them things to do. >> i am aware of no prohibition that can be placed on this committee interviewing them or requesting interviews. >> it is the intention to request interviews of these persons of interest. and i would like you to also at some point today run us through some of the troubles and perils you have in trying to take people out of a position and ultimately terminate them,

demote them, deal with them because i think that is one of the areas of interest. the majority of federal workers are great worker is to do a good job. they are -- workers that do a good job. it is vexing to all of us when when you get really bad actors, how long it can take, even when you know they are going to be terminated. we might be able to help you in shortening that process. ultimately we want to do process but my understanding is that can take up to three years to terminate somebody. >> i have heard of situations in which it can take that long but if you can move the process quickly, very often it is not quick enough. it is something that we should explore. >> we would like to work with you and other cabinet positions on that. when we talked yesterday, i mentioned a question i was interested in and hopefully you have been able to ascertain this, we heard a lot about

events planners and how much anaheim cost. were you able to get an estimate of had your in-house people taking it fully, what they believe they could have saved the american taxpayers if it was done by the existing structure you had? >> i appreciate the question. as you mentioned, you start with 100 $33,000 spent on event planners. it is a lot of money. that is important to make sure we are saving that. as the inspector general pointed out, by not having irs people designated to do this, who would want to keep costs down, you're not pushing as hard in the negotiation. i asked my cfo to talk with the team and make sure we had an understanding of what the opportunity was and we think it could be up to about 10%. 10% on a $4 million conference, now you are at $400,000.

that is why i take the findings very seriously and this is a change that has to happen with respect to any activity going forward. >> we learned that approximately 3.2 million dollars of the money spent on these conferences was redirected from accounts that should have been used to hire new employees. is that still a possible practice or has that been tightened so we can no longer think we are asking for more examiners and leftover money by not hiring these people get spent on a conference in next year people are saying we need more money for inspectors? >> it is a good question. it goes to how much flexibility there is to spend the money that has been appropriated. in this situation, there was this $137 million appropriation

and there were an ability to take $18 million of that and spend it on training. you had this allowability to move certain amount of money into training that would supplement the enforcement actions. this conference report, this report raises questions whether it was done effectively or not and raises questions about spending our money effectively. and could the money been moved to enforcement activities and had a higher return on investment? in this case it is hard to argue against that. but this is something we have to talk about. how are we evaluating the way the irs is moving its money into proper places to ensure we are doing the best for the taxpayer? it raises important questions. >> there is going to be a lot of questions. one that i'm sensitive to, there

is a statute, six -- 6103, we receive personal information all the time. when it comes to the irs there are specific rules and they are there for a good reason and we want to respect that. as you know, in one of your previous positions, this committee moved forward an agenda for something called the data act. we did so because we wanted government to have structured data so that no matter where data was, any particular information would be well defined so that if you wanted to extract it you would be able to do so. because you are in that previous job and you are now in this job, would this kind of improvement at the irs and other entities allow when an organization like ours says, we want to know everything but we don't want 6103 information, can you send

it to us with that being redacted by computers rather than the laborious task of blackouts? from your many years, what do you think about that? >> i will tell you one thing. we want to know, the better tracking of conference expenditures, the issue we found, and in response to you proposing the data act, working groups got together to figure out what does standardization mean and what would it open up in terms of knowing where our money is going? what happens is when we obligate money, we don't necessarily capture all of the relevant information we need in terms of where the money is going. we might obligate a set of money but we don't know which recipient to attach it to or which vendor is getting that money. i look at the conference report and i realize there is not good tracking for where the dollars are going.

six is what address that and you could have a much more comprehensive and systemic review of, here are the transactions, here is that money goes out in terms of what we spent on these types of activities across the spectrum. the issue is, how do you get there? how do you fix our management -- how can we have more transparency? that is a dialogue i have been having with this committee for quite some time. on the front lines of this type of financial management, i'm looking forward to working with you to provide insight. >> thank you. perhaps you can be the greatest asset for us working together with the administration broadly in finding ways to implement that sooner. it is rather bipartisan. mr. cummings. >> i agree, mr. chairman. definitely a bipartisan issue.

there is an organization in maryland whose philosophy i disagree with, but i will fight with everything i have got to protect them. it is called the national organization for marriage. they came into another hearing. they said that their tax information had been released to the public. they found it on the computer. i have got to tell you that disturbed me greatly. the american people have to know that information they are giving to the irs whether it is an application or tax return or whatever is kept private.

you keep talking about truth and trust. the idea that the irs has an impact on every single family in america and the idea that people are feeling more and more vulnerable with regard to their information being distributed all over the internet, i'm wondering how you feel about that. do you have a plan in place? where are we on that? i'm sure this must have disturbed you. you heard about it, right? >> this goes right to your question. i cannot speak to the issue of a particular taxpayer. >> i understand. in general. the reason why i mentioned a

name is because it is a maryland organization. it is not just the organization. it is the idea that information that taxpayers consider to be confidential appears on the internet. that goes to trust, too. speak that generally. >> i will. i have been in the seat for two weeks. >> i understand. >> that has been enough time to make critical conclusions. one of them i have reached is -- at least three that are the most important risks that we need to manage and keep it at a low risk level. the risk that taxpayers feel that their information is not protected, the risk of the irs

acting with non-impartiality, and their tax dollars. that jumps out at you. we are having issues in each of those areas demonstrated by the recent ig reports. part of our improvement plan is to put in place stronger practices that we have today to make sure we are hitting it out of the park on those three issues. we have to make sure that information is protected. we have to make sure that the irs is acting impartially. i think it was clear that the concerns you raised are ones i agree with.

we have to make sure we are spending taxpayer dollars wisely. the key is how is the irs doing on those three things? what i'm hoping to do is put in place new procedures and new disciplines and new checks and balances and make sure each of those three areas will perform better and there is a transparency to what is going on in each of those areas and there is a broader partnership that involves this committee and other committees whether it is gao are other local universities who can help us with these issues. we have to make these improvements collectively. >> thank you to everything you said. i appreciate you reaching out to the chairman and i within hours

after your placing that he wanted to work with us. i appreciate that. i'm wondering if you realize the moment you find yourself in. i'm not finished. this is a critical moment in the history of the irs. you have been called to an extraordinary mission. i'm not finished. an extraordinary mission. you have the duty to restore trust for millions of americans who work hard, blood, sweat, and tears. they managed to reach their families and they want a fair shot.

they do not mind paying taxes unless the things you talked about are done. i'm wondering if you realize the significant moment that you are in and how we are depending on you. we know you cannot do it by yourself. we will have to work together to make this happen. are you comprehend that? >> i do. i understand the enormity of the moment and challenge. the way that i look at it in order to make sure i am keeping my eye on the ball -- you can get lost in how big this challenge is. i want to get to work and roll up my sleeves. i'm a civil servant. i have a deep appreciation for the work that the federal government does in a most every realm. i'm a champion for the work that

civil servants do. when i was approached about this and realized there is a group a civil servant at the irs that are struggling, we have an agency in crisis -- i have had in my career a knack for solving government problems and i was the right person to go to at this time given my understanding of how the government works us. i said, what are the things we need to do? there are tough decisions. most every day i'm confronted with a set of questions and challenges. we should take some of these to the harvard kennedy school and it would probably say this is an unrealistic problem. too much public policy tension going on.

i get questions like that times a day. each of these questions are solvable. the issue is making sure there is cooperation and understanding, patience. understanding the enormity of the moment and i kick myself down to how do you fix a problem in a federal government? who can i bring to the table to help me? >> we will work with you and give you all the support we possibly can. thank you. >> this is an agency in crisis. you came from omb. >> i held a variety of different positions, but at the highest ranking position i had, i had roughly 120.

>> you'll have more under the enforcement of the affordable care act. is this agency that got too big and had too much responsibility? we are adding that responsibility to it. i think you're right that this is an agency in crisis. >> i think a couple of reactions if i could. one, i agree with the premise we need to evaluate the structure of the irs in its size and complexity. that is part of this movement forward. >> i have got to interrupt because ireland have a few minutes. i apologize. in order to deal with an agency in crisis and start fresh, you have to get to the bottom of the current problem. hold people accountable for what

is going on. let me ask you this -- have you talked to lois lerner in your time as head of the irs? >> let me answer that in two ways. i have to be careful about revealing any elements. i have not talked to lois lerner. >> at all? >> none. >> is she still an employee? >> the position that she held is now held by -- >> is she still being paid by the taxpayers? >> if i could -- this has been brought up. >> i'm asking if you had any communication as the head of the irs with lois lerner who was in front of our committee two weeks ago.

>> if i could answer, i think i understand the question. the answer is my understanding of what is going on in the irs involves working closely with the ig and the justice department. i have been careful with interfering with -- we have an individual that is a very important person to get information from. >> you think she has important information to offer? >> absolutely. i know the justice department and inspector general are working to get that information. >> how did she get to this page lead status if you have never talked to her? >> we have an audit report. it has conclusions of management failures going on in the irs. my first approach on

accountability -- one of the things i'm charged do is make sure we are holding people accountable. i have an audit report of concluded failure management. determine where those management failures were. that individual can no longer serve in the position of public trust. from that report along, i can make decisions. >> without communicating her. >> there is enough evidence. >> she is on paid leave and she refused to answer questions. do you think it would be appropriate for you to talk to her only in this context -- encourage her to come here so we can hold people accountable and make those altercations you outlined in your opening statement? >> i will.

>> will you encourage her to come in front of the committee and answer questions? if you want to restore trust, the central figure in this drama thus far is lois lerner. she is refusing to answer questions. will you her to reevaluate her decision not to answer questions? >> it is complicated. >> it is not complicated. we can restore public trust in the internal revenue service. i would encourage her to come forward and give us the information and answers we would like to ask.

>> that is a matter for her and her attorney. >> i understand that. will you encourage her? you said, i get the gravity of the situation i find myself in. you are slated to hire a bunch of people to enforce the affordable care act. lois lerner has refused to answer questions. will you encourage lois lerner to make a statement? i encourage lois lerner to come to the oversight committee and answer questions. >> two responses to that. yes, i encourage anyone who has

information -- including ms. lerner -- to come to this committee to cooperate with the justice department. i apologize if i misunderstood your question. i have to work closely and follow certain rules that have been laid out by the justice department and inspector general. >> i want to be clear -- you are going to encourage lois lerner to come in front of this committee and answer questions? >> absolutely. >> and anybody else? >> absolutely. anyone who has information about the situation needs to provide that information. >> my time is up. the gentle lady from new york is

recognized. >> welcome. clearly the way that some groups seem to have been targeted is outrageous. what type of things would send up warning signs? i would like to ask about a series of activities and whether congress should clarify what is meant by that and what is considered partisan political activity. if you could answer yes or no or don't know since i have limited time. is advocating for a particular bill considered partisan political activity? yes, no, you don't know? >> i'm not sure if i can apply the rule of law to that.

>> how about advocating advocate candidates? >> that is square. >> what about advocating to overturn a supreme court decision? >> that is a complexity i cannot speak to. >> how about advocating ft. worth control -- birth control or defeating access to birth control? should they enjoy tax-free status with funds raised from anonymous donors? >> i do not want to speak as an expert on these issues. it is my key understanding if you are advancing a candidate for office or otherwise. >> all of those decisions are rather whole political. maybe we need to clarify.

a lack of clear guidance and how groups are determined should be eligible. one key reason the problem exist is because original statute and regulation the treasury department subsequently issued. the original statute passed by congress provides organizations may qualify under 501(4)(c) only if they engage in social welfare activities. if you're in social welfare, you have tax status. you could qualify as long as you engage primarily in social welfare activities.

it is very different from requiring them to exclusively engage in social welfare. would you not agree? >> i would. >> another regulation is more than 50 years old. do you know why treasury changed it from exclusive? >> i do not. i want to work with the treasury department and congress to explore. right now i have a regulation i have to abide by. one of the inspector generals -- >> i know that. he recommended it.

we asked the deputy treasury secretary. do you think they should issue a new regulation that returns to the exclusive -- and he said he wouldn't. would you work with him and others on the possibility of other find this and going back to the exclusive? >> i have initiated discussions with policy of updating the regulation of stuff i do not want to presuppose the interpretation of exclusivity. we want to get the right definition. >> would you set up meetings in a bipartisan way? >> yes. >> i think that is important. this is the government oversight and reform committee. if you get the reform part of it, we are likely to have the same situation in the future.

the fact that the series of questions that are put before you which in my opinion are political, but in your opinion are not, need to be verified that need to be well understood by the employees at the irs and general public. my time has expired. >> the gentleman from florida is recognized. >> i yield a minute to mr. jordan. >> thank you. >> will you commit to giving this committee every piece of information you possibly can? >> yes, as subject to -- >> i understand. an attorney sent us a letter on monday, june 3. in order to allow a more complete interview, the request was denied.

we then have an e-mail the following day from the irs staff. she says unfortunately we are unable to produce the requested documents in advance before the committee. this is an employee of yours who wants to present documents so we can hold people accountable and we want to know why you will not give us the green light. >> it is not a question of not giving the documents, but a question of time. >> just a handful of e-mails. >> use of the interview is ongoing. i do not have specific information. when we get a document request from congress, we have to pull the entire data file down. we would go and take the entire e-mail down and have to review it.

some of these individuals have been at the irs for years. you're talking of housings of pages-. - thousands of pages. >> he has a document and wants to give them to you. it is not his whole computer. >> if he is willing to hand me the documents -- >> is willing to do it on monday. >> i do not have any facts about that. i have to look into it. >> mr. werfel, we have been trying to focus on conferences gone wild with the irs. i guess you put some people on suspension without pay? >> we are doing the right procedures.

>> i guess one person got a promotion after that and a bonus. a couple of folks got bonuses. any way to recoup some of those rewards for bad behavior? >> i do not know. >> we can change the law. the inspector general says no laws were broken. if none were broken, maybe we need to put some laws in. i heard mr. cummings, too. people are working their tail off in this country and feed their families and pay their taxes. what is this plastic squirting fish that cost $4000? you are at the omb before here. >> i was.

>> that is office of budget and management. you oversee the budget, but someone needs to look at the management. we do that as a committee. we are getting our information. i wonder what is going on in the office of edge in management. you were there and now you are in the irs. we have got to make the changes. the only thing we could do to turn the spigot off is the hearing we did. there was a guy in hot tub. $20,000 drumsticks. $135,000 for -- you can bring under control the cost of conferences, right?

>> we can go deeper. >> that is because of the scandal and investigation afterwards. nobody did a darn thing until mr. cummings and some of us -- >> if i could. >> have you been to the white house yet? >> no. >> mr. shulman went 160 times. >> i have heard that number. i have not been to the white house since i started at the irs. >> finally, within your purview, i think you have the ability to bring some of these costs under control and hold people accountable.

you were at omb. somehow this slipped by omb. now you have the ability to hold people accountable. people misused their position to use taxpayer money. we look forward to working with you. the first thing i want out of you is to tell us what we need to do to change the law. we look forward to your recommendation so people cannot be paid for these misdeeds with the public trust. i yield back. >> thank you. the gentleman from virginia is recognized. >> welcome, mr. werfel. there are some stories about you.

you are a frequent flyer. thank you for your past service. we will be supportive in your new role. to clarify one thing, you are being careful in response to mr. jordan on ms. lerner. i think there are two aspects of that to be careful about. one, predecessors and senior officials in the irs made certain statements made in an ig report that were considered by a judge, just yielding a very undesirable account that it was an employee that were dismissed with back pay. i assume you're being careful because you want to avoid that.

>> if i could, there are a couple of reasons why i want to be careful. i want to be as transparent as possible. when i arrived at the irs, i wanted people to make sure what i was seeing and the task i am taking. one, the process to hold people accountable and discipline people. it is long and complicated. we do not want to move too quickly without being fair and thorough. fairness is critical. thoroughness is critical because of what you said. if i do not have a strong record, i will lose my credit in dismissing them. i want to be fair and thorough as possible. >> that is correct.

some people can handle the -- >> in my review in questions, ig and the justice department have said they are asking these questions. if you ask these questions at the same time, it can be disruptive to our investigation. make sure we are on the same page with what questions need to be asked. we are professional investigators. we will keep you informed in real time. that will enable me to make sure there is a clean, fair, thorough investigation and that this committee has information it needs as quickly as possible. >> in response to mr. jordan it was exhorting you to encourage particular vigils to come back to the committee and testified,

your answer was a broad answer to encourage everyone to come. you should not be in the position of interfering with exercise of fifth amendment rights, including an employee matter what his or her status is at the irs. is that correct? >> that is absolutely correct. the fifth amendment is one of the constitution rights. this individual has a right to exercise her fifth amendment right. >> that is correct. >> if the gentleman will yield briefly. >> if the chairman will indulge me, that is why i use the word encourage.

one final question. you have been given a 30 day review assignment by the president of the united states. what will be entailed in that review what you hope will come out of that review and trying to address management practices and morale? >> yes. three parts. the first part is accountability. my 30 day progress report to the president and the treasury secretary will detail the framework that we are using to make sure we're getting to the bottom of of it and holding people accountable. it will have concrete examples that we are all aware of aware i am in taking steps to hold people accountable. we'll make sure there is transparency in how the process will play out in the coming weeks. and fixing the problem with

501(4)(c) reviews. it needs to be done fully and thoroughly. there is an existing backlog. it is an unacceptable backlog. hundreds of days of these taxpayers awaiting for their answers. what is the right process going forward? process previously has not worked. in that report will be a framework for due process. the third part is a broad review of the irs. cost-cutting and protection that we want to make sure we're looking at to show the american people we are serious about transforming to improve the agency. >> thank you. one other thing -- i know mr.

werfel isn't aware of it, but we held hearings on identity theft and the growing problem of it with the irs. i hope that gets reviewed as well. thank you. >> thank you. you have got your hands full. we wish you well. we need you to be successful. are you familiar with the internal reviews that are happening at the irs? >> yes. establishing and running that with my leadership team. >> are you aware that mr. miller had initiated -- >> i'm familiar with it. i'm working with a team to make sure i understand it. >> have you seen it?

>> i have talked to employees who were involved in that review. >> who did you speak with? >> the primary person i spoke with was nancy who led the review. >> what about [indiscernible] >> i have not spoken with her. >> you have not been given a document? >> that is correct. we have been requesting for a copy of the timeline. we have been assured that we would get and we still do not have it. when will you divide it -- when will you provide a timeline? >> i will check and get back to you with a specific timeframe. >> what did you learn about this review? they say there is a review and a document? >> it is frustrating.

i'm arriving at the irs. >> how convenient no documentation of internal review. no e-mails? >> i didn't say that. i thought you were referring to the former acting commissioner mr. miller. i do not have the report. >> i appreciate that. will that include background information? >> as long as there is no 6103, yes. >> what is reasonable for me to expect that you will deliver it? >> i do not want to overpromise. >> when will you get back to me? >> i will get back to you by the end of the day tomorrow. >> i appreciate it. that is something we want to look at. had you met mr. shulman prior?

>> yes. roughly five times over the course of four years. >> at the white house? >> i can recall i think two meetings or seen him twice at the white house. >> what was the topic? >> a ceremony and him being at that ceremony. the other was a meeting held in executive office building. the issue was that irs and mr. shulman representing the irs and expressing concern to the administration. the concern was the social security administration releases information about deceased people -- >> i look forward to hearing more about that.

let's keep going. how many criminal referrals? >> criminal referrals? i do not think there have been any yet. the justice department and ig actively reviewing those issues. they are getting to that question. >> do you believe -- the irs received money through the stimulus. here comes the stimulus. hundreds of billions of dollars. i cannot figure out how to stimulate the economy the obama administration gave $80 million to the irs. can you see where maybe this abuse of money is that they were overflowing with cash? the infusion of $80 million.

$4000 for a conference? that is fine. my time is running out. last question. what does it take to get fired at one of these organizations? you keep saying accountable, accountable. i want to know what it takes to fire someone. >> it is an important question. this committee is asking for a recommendation on how to improve the irs. part of that is how to improve accountability. are the rules sufficient to meet the country's needs in terms of when something goes wrong, we can hold them accountable? and looking forward to discussing that with this committee and others. >> for misdeeds and misspending the american people money.

>> can you fire someone for refusing to answer questions to the u.s. congress? >> i do not know. i might need legal counsel to advise me on that. >> the gentlelady from california is recognized. >> can you promise a more frugal and kinder irs? one of the problems that i think initiated the anaheim conference was the fact that you're coming to the end of a fiscal year and there's unused money. correct? >> yes. there was extra money available. clearly in this case that money was not deployed to its best use. >> no doubt about that.

>> you have seen this phenomenon before. various agencies come to the end of the fiscal year and have money the account and they want to spend it down. they fear if they do not spend it down, they will not be fully funded in the coming year. >> yes. >> what do you recommend we do government wide? irs is an example of what is going on in every agency in the country. they have money at the end of the fiscal year. they do not want to lose it so they use it. find some way to use it. in this case it was an anaheim conference or it is swag or whatever.

>> i think it is a difficult question to answer. what happens at a lot of agencies there are chief financial officers and chief operating officers that are reviewing all expenditures that occur to make sure that money is not being deployed for unnecessary or inefficient purposes. the goal is to make sure that the resources available are targeting areas that will have a positive return for the tax payers. if i seen expenditure, i do not automatically think that may not be a good expenditure. >> right. there's a difference between

doing a criminal investigation and having a conference. >> absolutely. >> i have got limited time. give us some advice. you come from omb. what would you recommend we put in place that would reduce the likelihood of that kind of crazy spending and the shopping spree mentality? >> one idea that comes to mind is that there should be more transparency about what goes on with federal spending across the entire spectrum. it would bring light and day to appropriators.

>> the anaheim conference -- how has the irs addressed this concern? if you have a ready answer day, you do not have to enter it again. >> we have either implemented or in the process of implementing. we are updating manuals. make sure there is robust accounting. make sure we know where the we updated the. requirements. the irony is that we have knocked down in very significant ways the percentage of this activity. we put in new procedures to make sure when it does happen, that it is tracked more appropriately.

>> i have got a bugaboo about swag. i think that a government does not need to be in the business of buying anything that resembles swag, and i think we spend a fair amount money. i'm sure it's very expensive. what would you say about swag? >> i'm in complete agreement. my choice to go to the irs is that i have history of responsibility and cutting waste and reducing error. i was pretty central to the efforts at omb to cut down on conference spending and swag and put in an executive order.

restriction on spending on swag. the types of things you saw going on in 2010 are significantly that likely the happen now. it will not happen while i'm commissioner for sure. >> thank you. the gentleman from oklahoma. >> we have had numerous conversations. you have done an excellent job. there is much to be done. it is an interesting feeling to walk into the irs and wonder, where to start? might as well start here. you mentioned in an earlier statement the record of lost trust. people call me and tell me i have always suspected i was being targeted.

i was audited by the irs. i have wondered about that. this has moved from nonprofit groups that we know now are targeted that asked for additional information to individuals who rise up and say i think i was as well. we're looking at this farther. questions will continue to rise. people will continue to contact our office. i have never been audited and i started getting involved politically and now i have. that is coming as well. >> i have a reaction to it. we have to fix the process. one of the process fixes that is

vital best fixes that is vital is more checks and balances and how decisions are made. there is an active oversight and checks and balances. there are controls in place to make sure fairness. >> right now there's not much comfort for it. you mentioned in your opening statement that the former director of collection policy is not the current director of the implementation oversight of the affordable care act. there is a reception held were 1800 people invited. the e-mail track coming in from the hotel reads this -- this is someone informing me.

this is to be kept confidential. it is posted on the hospitality toward. this is only to be used for food. the beer and the wine will be paid via credit card paid at the end of the function. do not post this to the room. it cannot be shown as a charge. i have [person's name] permission to use a credit card. they had $44, and had $65 a person listed as food on it. one of those individuals are now under administrative review

and aren't paid leave. yet the start that investigation. you bring it up in your opening statement. do you know right now who the other 18 people that were involved in that? >> we are gathering the information. it is important that we have filed will affirmation. we are working on that. >> 18 people were set aside for hospitality. do you know? >> it is my understanding that has been the right range. i do not want to -- >> are you familiar with any other senior-level officials that were there? we do not see any tracking. we are trying to determine who was invited. >> i'm not yet ready to

articulate the statistics, but we are looking into that issue and will get you the answers. >> again, the confidential reception. >> we were able to determine the two employees that may have, but there is significant evidence of violation of ethical code of conduct. >> you understand the issues of this. this is the oversight office for the affordable care act. what was this and was there in an appropriate use of funds here? a lot of things we need to connect. you have a timeframe of when you have that together? >> i'm not going to commit to one. i will get back to you

expediently. >> i appreciate that. can you give us a ballpark? you have got enough facts and information because you puts on on administrative leave at this point. we started asking about this between two days. enough information has risen up quickly. we are trying to figure it out as you are gathering information. >> my team will update you as we go in the process we are about to undergo. there are facts gathering before someone is dismissed.

that is a 30 day initial process. >> terrific. thank you. >> mr. chairman and mr. werfel, good afternoon. the irs holds businesses and individuals to high standards when filing taxes. nonprofits must maintain certain standards for the tax exempt purposes. the irs has a measured a pattern of management failures. it is troubling and acceptable. you're one of the most powerful agencies in the united states. their serious consequences than any business or individual commits fraud or suspected of

doing wrongdoing with regard to taxes. what steps are being taken to reform the agency now make sure you hold your selves to the same standard you hold american people? >> that is a very important and good question. it is important to point out that if you look at the irs on the day the report was issued on the irs today, there has been a replacement of leadership at various levels. the irs acting commissioner slot, commissioner of tax-exempt organizations, if you're familiar with the irs arc, i'm working my way down. i have brought on other people.

david fisher is a high-ranking official from the government accountability office. an expert in risk management and comes from gao. he is it chief risk officer of the irs. he is indispensable in these efforts to make sure we are changing the culture and the approach in the irs. other steps are accountability and continuing to review the information in the audit report. there are gross examples of mismanagement. you can make determinations and i am doing it as thoroughly as i can. some individuals can no longer hold positions in the public trust at the irs. i can keep going. i want to give you confidence that we have an action plan and things taking place to get it

these issues. it is hard. we are working diligently. >> i appreciate that. there's respect to the opening remarks by ranking members, i hope with your leadership we can take a step back and look at the whole of the agency and look at where we need to strategically reform and not just move players and actors within the agency, but fundamentally reform. that is one of the missions of this committee. i know that you touched on the importance of information being protected and impartiality, which is one of the reasons we are here today. i need to touch on one concern i have. being from nevada, i do not believe that anaheim or places like las vegas should be singled

out somehow as because of the place and the way the agency was involved, which was wrong, but somehow the place should be targeted and prohibited from having conferences held. that is why we introduced a committee to protect cities from discrimination to prevent federal agencies from blacklisting resorts and casinos as conference destinations. it is not the destination that is the problem. it is the internal failure to spend appropriately. it doesn't matter where that occurs. i want that noted. i want to follow-up in my concluding question to ms. maloney.

you said that you have to follow this primary regulation. >> i do. >> why do you have to follow the law? >> i have to follow the law and regulation. >> exclusively. >> that is part of the challenge. >> the regulation is not in compliance with federal law. correct? >> i do not know that can answer that question. >> you said earlier that it is not the same as exclusive. >> it is not. >> therefore it is out of compliance with federal law. agencies must follow the law. we, as congress, set the law. we have not change the law. it is important that you implement the regulations accordingly. you have agreed to some

bipartisan precipitation because the law is exclusive. >> the ambiguity that is created is a problem. >> unless congress changes the law, that is the standard. >> we are looking at those changes. >> thank you, mr. chairman. >> thank you, mr. chairman. thank you, mr. werfel. i want to follow-up on some of these. do we know exactly when she left to take on her primary responsibilities with the affordable care act?

>> i do not have an exact answer, but i think it is the range of spring-summer 2010. >> you will wait -- you will be able to get back to us? >> we are working on that issue. >> the other day, the bonus was brought up. you said you would get back to me. do you have an answer? >> can you remind me which question? >> what kind of a bonus was paid? i assume you went back to your office to check on it. can you tell us today what that bonus was? >> i will ask my staff. i do not have that information at my fingertips. >> did you go back and look into it? >> i went through all of my commitments to make sure we were getting the answers.

i do not know yet. >> you have not had a discussion about bonuses? >> there will several -- there were several issues raised about bonuses. i do not want to miss speak. i will get you the information. >> does your staff know today? >> we will have to go back to the irs. >> so they do not know? >> this is -- we will get you the information. >> let me go forward. can you give us assurances that targeting outside -- targeting did not happen with regards to auditing, nlt waivers, candy -- penalty waivers, can you give us assurances that is not happening systemically?

>> i am not aware of its past this time. >> have you investigated? >> i have been here for two weeks. i have not completed the review. >> you cannot have us the assurances. >> i would clarify that at this point in time, i am not aware of it. if i was, it would be stopped. >> you also talked about, we need to have more people on accountability. previously, it you said you need more layers of accountability. that was not something that was unique to just cincinnati. it involved a number of people in washington, the technical

advisors. dozens of people knew about the problem. how does more people actually fix the problem? >> we could end up with a solution and i would be very open to that solution. i am also interested in cost cutting. what i meant by more people was we have people who have different responsibilities, maybe an independent board or something like that -- >> we need an independent board? >> we have one. this is something i am exploring. i am being candid about different ideas. maybe that type of board can be asserted to do other reviews. if you have a situation where there are ongoing reviews, you

might be in a situation where this was picked up more quickly. >> have you had conversations with beth tucker and what she felt like was the issue? >> she is a critical part of the leadership team, yes. >> was she aware of it? >> she was not aware of it. we have collectively looks at the situation and agree the singling out of applications for extra scrutiny waste on political labels -- >> she was never aware until the report came out. >> this is part of the process. i go back to the guiding principles. thorough, fair, and expedient. i have to be given the opportunity to do a thorough and fair and expedient -- >> i am asking you about your personal conversations with her. >> based on my personal

conversations, i am not aware at this time that she knew the situation. >> with regards to nancy, she was the assistant to sarah, is that correct? >> people moved around, but she was the technical advisor. >> when to first go to cincinnati? she would've had to have flown to get there or pay mileage. we would have some documentation. when was the first time she went to cincinnati? >> i would like to double confirm, but i think it is around march 2012. >> when in march? >> i do not have that. >> that is critical. we have testimony that was given in ways and means on march 22.

if she went before that, it would indicate that we have people that sent her to check on things while that testimony was being given. that is critical. >> we will get you more precision on that. >> thank you, mr. chairman, for your indulgence. >> on sunday, david was on the sunday shows and they were discussing the targeting of conservative groups and he made the statement that this was not at all political. i am curious, do you agree with his assessment of what went on in the tax-exempt division of your organization? >> we do not know the answer to the question. the audit report does not find any evidence.

the audit report that i am relying on, it does not find any evidence of political motivation with respect to this targeting. >> has there been any group on the list who was targeted who is a left-leaning group? yes or no? >> i can answer that question once i make sure i have appropriate redaction. >> are you aware? that has come forward and said they experienced the same type of targeting? >> we have started to produce documents to congress, to ways and means incident finance. there are additional helpful information coming to light to

give more information about different types of organizations that were on the list and based on that, the problem with that document is that -- >> any terms, i have yet to see one term on the list, i have yet to see any terms that would apply to left-leaning groups. they only seem to apply to right-leaning groups. i am back to the first question. do you agree that this was not political? i do not see how you can reach any other conclusion that--other than it was political? you are the guy who was cleaning up an agency, you need to know the motivation.

the only logical conclusion was that this was politically motivated. >> the audit report did not find it. it would be inappropriate for me to speculate that there was political -- >> why is it inappropriate for you to speculate? not one group on the left has been identified for harassment. hundreds have been identified on the right. not one on the left, hundreds on the right, and yet you are still seen, i do not believe this was politically driven. >> i do not have enough evidence. >> reasonable people could look at the evidence and say there is enough evidence to conclude that it was politically driven because we have yet to find one group on the left. >> the tension is there a smart

relevant documents and information that needs -- there is more relevant information. >> anything that shows groups on the left were targeted? >> i am unable to answer that question because i would be legally on allowed to answer that question because i have to go through a process to make sure i have an answer that i can leave the league -- illegally give you. >> i am not asking -- i am not asking tell me the specific group. is there any group on the left that has been targeted? >> would you define what is left

and what is right? i am serious. what is left and what is right? that is a hell of a question will stop -- that is a hell of a question. >> do we know of any groups with any progressive or liberal in their titles? that is what i am getting at. >> i was brought to the irs to make sure we are enforcing the rule of law. what i will say -- >> i do not know how it violates the law. the hamilton county progressive institute was denied. i am not telling you to talk about them specifically. have you discovered any? name one. we have received no evidence that would validate his

statement. >> all i can say is the information is forthcoming. we are running a process. the answers will be available, but i cannot provide premature answers. i just cannot do it. >> thank you very much. thank you, mr. werfel. i know you have only been there for two weeks, but this is a subject that is bugging the hell out of me. i keep hearing this argument that because we had some bad players and people not doing their jobs properly, that there is going to be a problem with addressing the responsibilities under the affordable care act. this is america. everybody in this committee --

because we have a bad actor, we do not quit congress. we do not suddenly go off mission. we let them go and find somebody else who can do the job. everybody in this room has been through some kind of process like that. this is my point. i do not buy this affordable care act, because we have some bad players, we cannot do the job. this is america. if we had that attitude, we would never get anything done. i am asking you, from what you have seen, i know you are going from top to bottom and you're doing what you got a do, tell me

this, do you still confident that doing the things you can do, that you can find the appropriate people and create the climate whereby we can get the affordable act responsibilities done pursuant to the law no matter how many times may want to do away with it, it is the law. we are charged with the constitutional duty of enforcing the law and making the law happen. you have a responsibility of dealing with the law. can you find the people who can do it? >> yes. >> can you carry out the responsibilities? >> yes. >> i swear to god, it burns me, this attitude.

my father was a former sharecropper with a second-grade education. one of the things i loved about my dad, god bless his soul, he used to always say to us, there is no such word as can't. you can get things done. he was able to raise seven children, educate all of them well, and build his church with my mom on a second-grade education. this is america. as i said to you earlier, you have a tremendous responsibility, but i pray that you do not go in there with the attitude that because we have some bad actors, and because the climate was not what we wanted it to be, that we cannot carry

out the mission of this country. we are better than that. if we take that kind of attitude, i do not know what we will be able to accomplish. there is no member of the congress who has not had to let somebody go. who has not had to fire somebody. how will you go about that? i am tired of that argument. >> you are absolutely right. we have a legal responsibility, a tough operational challenge. i have started to work through our aca work very closely. one of the first things i have done is i have had to put in a new individual who is taking on the responsibility as a commissioner of services and enforcement which oversees the affordable care act. she is one of the most talented civil servants in the irs. she is in a normatively

effective track record of getting things done. for me, it is a lot about leadership. she will be able to recruit the right talent. hold individuals accountable. i will be very active in this area because it is one of our priorities. i am responsible ultimately to make sure we hit all of our deadlines. my commitment is to do everything we can to hit them. >> thank you very much. >> they do not get any easier than this hearing. the good news is this one is nearly done. the bad news, you have agreed to come back and work with us. let me get back to -- you are familiar with the congressional

act that created the taxpayers bill of rights. >> i will not say i am an expert, but yes. >> when you look at it, if you would get back to us and talk to us about -- i will get it back on the screen. 1996 act which amended the code for 1986 and so on, but it established taxpayer advocates and so on. it is an area in which that hopefully you would look at that and say, aren't there some things that were not upheld that you would fix by better management and some things that need to be put into symbolism of that act that would cause the ways and means committee to update it?

the confidence we are asking you to reestablish is literal and some of it is symbolic and some of it takes time and some of it, like today's hearing, we have started that. >> i think the people of the irs, they are shocked and appalled by what happened. they are embarrassed by some of the inappropriate spending and the anaheim situation. there are institutions within the irs who hold of the primary mission to help taxpayers navigate through the tax system in a way that is fair and understandable. i have spoken to our national taxpayer advocate and she is ready to take on the types of transformational changes necessary to make a difference. >> i appreciate that.

perhaps that somebody should begin asking, one of the challenges is in the opinion of the chair, you had to former individuals, one acting who did not do the job. they are not managers up to the task. i cannot go back through every commissioner, although i have met a number of them. your two predecessors, not so good. i think we have met them, we have seen them, the american people have watched them. they are disappointed in what happened on their watch. a couple of things, you are aware of the investigation related to procurement about

half $1 billion worth of open contracts originated within a hub zone in the district of columbia. >> i have had preliminary briefings on it. >> this, in the opinion of the chair, represents fraud was perpetrated. it included misconduct by personnel within the irs and by the applicant. i certainly think that if it is within your power to immediately terminate any further procurement on a contract is costing the taxpayers every time you buy off of it more money than a replacement contract would cost, your willingness to

attack that. symbolically, it is a big difference. >> i do not know enough to comment conclusively or concretely, but i will commit to work with you on this, to see what i learn, share with you and make sure we have a good path forward. >> i will enlighten you with one small fact. when this applicant applied for a hub zone, this is an area that could use some job creation, the applicant said, i will create jobs in northeast washington and created only a few jobs with some college students whose parents were spending $30,000 to

send them to catholic university, and not part of underprivileged portion of northeast washington, dc. they were making a few dollars looking at computers, providing no significant jobs, no jobs to the indigenous people of that region. they had no real presence there. and abuse of a set-aside to people on both sides of the aisle means mr. cummings and baltimore, those people did not get an opportunity to bid on that lucrative contract. i am beating a dead horse, but i think we are passionate about fixing that particular contracts. >> i want to thank you for raising that issue.

you are absolutely right. whatever the law is with regard to hub zones, i want to make sure they have been properly addressed. people should play by the rules. the rules have been set up in a certain way. if people are not going by the rules, i have a problem with that. i would appreciate your response. i know you have to look into it. >> i absolutely will. >> this is a discovery point. i understand -- i do not want to be unfair to anyone. this committee would like to dispense with all of our discovery on the broader case as soon as possible. i know you would like to have as much of that behind us. in order to do so, we have a specific request, which is documents have been requested by

this committee and even if they were not requested by the ways and means committee, we would appreciate a essentially, sending unredacted all information requested by this committee to the ways and means committee because they have personnel cleared, they can hold those documents. if we need a special look, we can ask them to analyze, suggest redactions, we can expedite that. they can look through them for characters -- characteristics they need and they may need to look at what you would give to us redacted. we are looking hand-in-hand with the ways and means committee. if you could consider that anything requested by this committee is, in fact, a carbon

copy to the ways and means committee, -- >> in other words, you give us an information request. we have to redact it, we get it to chairman camp and senator bockius earlier because they do not need the -- senator baucus earlier because they do not need the redacted version. >> to the greatest extent possible, we would appreciate that. >> i understand the request. we will look into it and get back to you. >> we would like to prioritize the documents we need sooner rather than later. >> that is helpful to us to understand what key search terms, the better clarity we have on that, the quicker the information starts flowing to you. >> i appreciate that.

mr. meadows will be recognized. you are good? i am not going to be -- i am closing. i want to thank you, this is a good start. it is a tough matter. i feel like you are coming in the day and trying to bring back the reputation. no doubt something bad happened, it did not happen on your watch. you are the person we are looking to to take decisive action. i want to personally thank you to the extent you have so far. >> i tell my constituents, there are moments in life that are placed there to become a movement. a moment to a movement.

i think we have a moment where we have seen so much that needs to be corrected. i am very pleased to see, when you talk about the things you are most concerned about, to turn that into a movement to make the irs a place for all americans and their families can feel their trust. it is painful for my constituents, a lot of them do not have bank accounts. when they send that check into the irs, or they they get that letter about an audit, the people on the other side are going to treat them fairly. and with courtesy and that they can feel a level of confidence. i thank you and i think the president for pointing it. >> i want to thank the president for appointing you to an acting position.

we just got an appointment request for the gsa position. this committee would make for the record that we like confirmed individuals. we will continue working with you. we stand adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> contact info, district maps for each member of the house and senate.

cap that members, justices, and the nation's governors. the directory is $12.95. order online at www.c-span.org. joining us from capitol hill, what are the key issues that senators plan to key -- bring up on the immigration bill? >> you will see senator start to frame the debate. we have two camps here. we heard a lot from senator sessions leading the opposition, making the case that they should be done in a piecemeal way. making the case that it's could hurt low-wage workers. this could threaten a fragile economy, a fragile recovery. he believes that something should be done.

something less comprehensive, more piecemeal is the way the senate should take this on. on the pro side, you will hear the gang of eight, made up of four republicans and four democrats, have drafted this compromise, and a putting it forth. making the case that the current system is broken, it needs to be revamped. they have gotten a sign on from labor and the chamber of commerce. they believe that they have the best chance, the best compromise to move forward on reforming our immigration system. >> on that gang of eight, it had bipartisan support. where does that stand now? is that still holding? who are the key players in that? >> interestingly enough, john mccain, one of the members of the gang, told me in casual conversations, he thinks there

is already 60 votes for the bill. then you're hearing from senator marco rubio who is making the case more public and by and needs to be done, and he is asking for ideas to strengthen border security, which will help something past the house. theelieves that it -- if border security portion is enhanced, it seems a greater chance of passing. >> over the next couple of weeks, when the amendments,, take a look at the key proposed changes that we are likely to see debated or to pass. >> the key one is whatever comes up with center rubio's implements. right now he is talking to his republican colleagues to solicit ideas, and input on the bill. this is a way for him to get by

and for other republicans. itsaid he is actually hinted is not enforced -- that he may walk away from the bill. i think that is the key issue right now. other possible things could throw a monkey wrench in this. it could be an issue for treating same-sex couples,, adding them benefits -- giving them benefits. a centrist mentioning might want to revisit the gun control debate in this, which could be explosive. >> what about the white house? hands-as taken a very off approach. he's very much in favor of this passing. i think that is why he is giving the senator's room to negotiate and discuss. it is one of his top priorities going forward. i think it is hard to say when

the right time will be for him to step in. he has been careful to stay back because he is concerned that he may alienate conservatives if he o -- if the campaigns too much. the $64,000 question, the house has a gang of eight made up of four democrats and for public and sprayed one republican has stepped away from the group over concerns about whether the bill would allow newly legalized immigrants to get health care benefits. while there is no animus in the decision to leave, there are going to be competing bills. the remainder of the -- --o, it is unclear whether

what house leaders are going to do. if they're going to go to in a piece by piece approach, or a comprehensive bill. there is a lot of momentum to get something done. a lot of pressure. that is what the senate hopes to pass the bill with 70 votes. they will pressure the house into dealing with the issue. >> the immigration debate on capitol hill. thank you for the update. >> thank you. >> in order to raise money, i filed application with the irs in january 2011 to obtain 501(c)(3) status. as an educational organization. as of today, i have been waiting for 29 months without status. >> many agencies of the federal government do not understand that they are servants of the people. they think they are our masters. they are mistaken. i am not interested in scoring political points.

i want to protect and preserve the america that i grew up in. the america that people across -- cross oceans to become a part of. i am terrified it is slipping away. of ac three or c for tax exemption is to enable easier promotion of public goods, not put it to work. which are trying to manipulate the system to avoid taxes. >> this week and, tea party members on irs targeting of their groups. live coverage of the chicago tribune lit fest.

the lifean history, nd legacy of major adverse -- president obama and the chinese president are in california. here is a look at the history of sunny lands. it is the historic estate of wall tour and leonore. they built this as a winter residents. it was completed in 1966. they lived here until their deaths in 2002, 2009. it has been referred to as the

camp david of the west. that is of course because presidents came here to relax, and to get away from the hostile and bustle of washington during the and -- during her lifetime. that company actually published the daily racing forms. and the philadelphia inquirer. his father had been involved in this for decades. his father actually was sent to prison in 1940 four tax evasion. at that point, walter took on the reins of the publications. it was in deep financial problems. he was responsible for introducing a number of new publishing elements that were wildly successful.

" was launched. the first geared to young women. he put together this idea of "tv at a timed launch it when only 10% of americans had televisions. become the most popular magazine america. it made the bulk of the fortune of tribal publications. he had a genius for recognizing future trends. he was able to use his company to get ahead of those trends. ,eonore was a delightful hospitable woman who was typical of her generation. she was a woman behind the man. very often walter would be the person who received the first

recognition, and he would be the one who was the businessman, whose monies funded their lifestyle. walter had a speech impediment. he practiced every day to make certain that he could form his words and speak clearly. he was very careful about his language, and his presentation. he was more reserved. she was the more lighthearted and more engaging conversationalist. when the atria -- we are in the atrium of the house. this is the room that you would've seen as you are d.lcome they all came through the front doors. this space was used for receptions. for the new year's eve parties

that happened regularly. much of the furniture was removed. it was set so they could have up to 110 people for a seated dinner and dancing. jimmy stewart might sit at the atoh -- at the pn oh -- -- the piano. they have this long personal history. when ronald reagan was an actor in hollywood'. that relationship was deep, personal, and continued when ronald reagan was governor of the state of california. he came here. then of course, after he had been elected president, he continued to come here. he came every single year for 18 418 -- 418 of their parties.

for 18 of their parties. and government came together in a large social gathering. otherwise, the entertained in small groups. they would invite these individuals who wear their friends to spend time here. then they would determine who those friends might enjoy meeting, and create these kinds of connections that hadn't existed before. ofy used these elements midcentury modern architecture to create a space that was informal, that could flow from place to place, and that at the same time took a huge space. this is 6400 square feet. it was the size of five average american homes in the 1960s. it doesn't feel overwhelming.

it has a very comfortable quality to it. that is the combination of the art -- architecture and the furniture groupings. right off the atrium and living room is the room of memories. a very special room at sunny land. the room of memories was actually named that. they made the determination they wanted a space where they could keep the memories of the important friends and family, individuals who they had income in contact with. there is actually a portrait of winston churchill that is signed. he met walter in the late 1940s. we have a photo of them with prince charles. this was from 1986. nhe anniversary -- they had a

important relationship with the royal family. you see walter with queen elizabeth. living in london for five years, they continued for the rest of their lives to correspond, and connect. you see walter actually getting out of a carriage as he was going to be presented in london to the queen as he took on the job of ambassador. you see a photo of the bushes 's. .ere is george w. bush the clintons. this wall is full of individual

memories that record numerous inversations over decades their life. clearly, those individuals who were important to them over time made it to this wall. it isn't generally an individual who they knew only once, but people who became their friends. in addition, we have a photograph of ronald reagan sitting in this chair, looking at the television in this cabinet. gorbachev was speaking to the you -- the american people about american -- about nuclear disarmament. at the same time, ronald reagan's speech was being

broadcast to the soviet people. this topic was critical in changing world political dynamics read -- world political dynamics. and makes it a historic spot. they were republicans. they were lifelong republicans. yet -- however, they crossed the. actually, walter had the philadelphia inquirer endorse lyndon johnson when he ran for president. he didn't only support republicans. your public and see supported tended to be more centrist in relation to what we might see today. this is the yellow room. it is one of five historic guestrooms. this one was the preferred residential room.

the reagan's always stayed in this room. it has a beautiful view. -- margaret thatcher was here. colin powell was here. roomstigious list of residents. like all the rooms in the guest ring, this was differentiated by its color. we have a pink room in a peach room, and a green and blue room. actually, if you were sitting here, you would have color- coordinated jellybeans. this room actually also had twin beds. we have it set up this way. if you visit as a participant in one of our retreats, we actually change the safed and provide current beds.

they made a get -- a gift of this property to the nation for the purpose of continuing its history by dynamic and relevant conversations amongst people today. we have an interesting mission. it is both exclusive and inclusive. our property is being preserved and maintained so it can be used by a relatively small number of people for these retreats. at the same time, it is being reserved and maintained so if that can't -- they can be open to the public for broader access, so they can appreciate the history and experience the

sunnylands. >> president obama is a california tonight to meet with the chinese president@glance. tonight on c-span we will show you the affordable care today in san jose followed by the interment ceremony for center lautenburg. , heesentative john dingell talks about his 57 year career. >> president obama talks about implemented the affordable care act in california and encouraging young americans. he took questions from reporters and addressed concerns about reports of surveillance programs. this is about 25 minutes.